# United States Court of Appeals
FOR THE EIGHTH CIRCUIT

___________ No. 96-3262

___________ Kansas Public Employees * Retirement System, * * Plaintiff - Appellant, * * v. * * Blackwell, Sanders, Matheny, * Weary & Lombardi, L.C., a law * partnership; William H. * Sanders, Sr., individually and * as the representative of a * defendant class, * Appeals from the United States * District Court for the Defendants - Appellees. * Western District of Missouri.

___________ No. 96-3317

___________ Kansas Public Employees * Retirement System, * * Plaintiff - Appellant, * * v. * * Reimer & Koger Associates, * Inc., a Kansas Corporation; * Ronald Reimer, an individual; * Kenneth H. Koger, an * individual; Clifford W. * Shinski, an individual; Brent *

### -2-

Messick, an individual; Robert * Crew, an individual; Sherman * Dreiseszun, an individual; * I. I. Ozar, an individual; * Frank Sebree, an individual; * Peat, Marwick, Mitchell & Co., * an accountancy firm; KPMG Peat * Marwick, an accountancy firm; * Robert Spence, an individual; * Thomas S. Morgan, co-executor * of the estate of Frank S. * Morgan; Marilyn J., co-executor * of the estate of Frank Morgan, * * Defendants - Appellees, * * Shook, Hardy & Bacon, through * C. Patrick McLarney, acting as * a representative of an agreed * upon class of partners in * Shook, Hardy & Bacon, and for * Shook, Hardy & Bacon P.C., * * Intervenor Defendant - * Appellee. * *

------------------------------- * * Kansas Public Employees * Retirement System, * * Plaintiff - Appellant, * * v. * * Blackwell, Sanders, Matheny, * Weary & Lombardi, L.C., a law * partnership; William H. * Sanders, Sr., individually and * as the representative of a * defendant class, * * Defendants - Appellees. *

### -3- ___________ No. 96-3680

___________ Kansas Public Employees * Retirement System, * * Plaintiff - Appellant, * * v. * * Reimer & Koger Associates, * Inc., a Kansas Corporation; * Ronald Reimer, an individual; * Kenneth H. Koger, an * individual; Clifford W. * Shinski, an individual; Brent * Messick, an individual; Robert * Crew, an individual; Sherman * Dreiseszun, an individual; * I. I. Ozar, an individual; * Frank Sebree, an individual; * Peat, Marwick, Mitchell & Co., * an accountancy firm, * * Defendants, * * KPMG Peat Marwick, an * accountancy firm; Robert * Spence, an individual, * * Defendants - Appellees, * * Thomas S. Morgan, co-executor * of the estate of Frank S. * Morgan; Marilyn J., co-executor * of the estate of Frank Morgan, * * Defendants, * * Shook, Hardy & Bacon, through * C. Patrick McLarney, acting as * a representative of an agreed * upon class of partners in * Shook, Hardy & Bacon, and for * Shook, Hardy & Bacon P.C., * * Intervenor Defendant. *

### Th e Honorable D. Brook Bartlett, Chief Judge, United State s 1 

### District Court for the Western District of Missouri.
The investment advisor defendants are Reimer & Koge r 2 

### Associates, Inc., and a number of individuals associated wit h Reimer & Koger: Kenneth H. Koger, Ronald Reimer, Clifford W

. Shinski, Robert Crew and Brent Messick.
The accountant defendants are KPMG Peat Marwick and Rober t 3 

### W.L. Spence, a partner in Peat Marwick. The lawyer defen dants are Blackwell, Sanders, Matheny, Weary 4 

### & Lombardi, L.C.; its partner William H. Sanders, Sr.; Shook , Hardy & Ba con, P.C.; and Shook, Hardy & Bacon, a class of partners. A Shook Hardy partner, Frank P. Sebree, is joined both in hi s capacity as a lawyer and as a Home Savings director. Michael Russell was a trustee of KPERS and a defendant i n 5 

### this case. The court entered summary judgment for Russell o n March 4, 1997, and KPERS appealed. KPERS moved to stay argument of this case so that the appeal could be consolidated with this appe al. We denied that motion. Order of March 11, 1997.
T he Home Savings defendants are the Estate of Frank Morgan , 6 

### Sherman Dreiseszun, I. I. Ozar, and Frank P. Sebree.
-4- ___________ Submitted: March 13, 1997 Filed: May 13, 1997

___________ Before McMILLIAN, JOHN R. GIBSON, and BOWMAN, Circuit Judges.

___________ JOHN R. GIBSON, Circuit Judge.

Ka nsas Public Employees Retirement System, known as KPERS, appeal s from the district court’s entry of an adverse summary judgment in its case 1 ag ainst its investment advisers, accountants, lawyers, one of its ow n 2 3 4 trustees, and the forme r directors of Home Savings Association, arising

5 6 out of KPERS’s

### KPERS v. Reimer & Koger Assocs., Inc. , No. 92-0922-CV-W-9 7 

### and No. 95-0819-CV-W-9 (W.D. Mo. June 3, 1996); KPERS v. Reimer & Koger Assocs., Inc. , No.92-0922-CV-W-9 (W.D. Mo. July 25, 1996). The court also denied KPERS's motion to amend its Sixth Amended Complaint. KPERS v. Reimer & Koger Assocs., Inc. , No. 92-0922- CV-W-9 (W. D. Mo. Aug. 5, 1996).
-5- investment in Home Savings, a failed thrift institution. In an earlie r appeal, we held that KPERS's claims were not gov erned by a ten-year Kansas statut e of limitation, but that Missouri choice of law provision s controlle d. KPERS v. Reimer & Koger Assocs. , 61 F.3d 608 (8th Cir

. 1995)( KPERS III ), cert. denied , 116 S. Ct. 915 ( 1996). Under the Missouri borrowing statute, KPERS's claims are barred if they would be untimel y under the two- and three-year statutes provided by Kansas law. Id. We
rem anded to the district court to determine whether KPERS's claims wer e barred by the Kansas statutes. The district court held that KPERS’s claim s are time-barred under Kansas law. KPERS argues that the court should not 7 have applied the Kans as statutes of limitation to KPERS’s claims, because its c laims are exempt from all statutes of limitation. Further, KPER S argues that, even if the claims are subject to t he statutes of limitation, the d istrict court erred in applying the statutes of limitation to th e facts of this case, specifically that it misconstrued Kansas law concernin g when a cause of action accrues, overlooked disputed fact issues, and faile d to consider all of KP ERS’s claims against its accountants. We affirm the judgments of the district court.

KPERS is the pension fund for certain employees of the state o f Kansas. In 1983 Governor John Carlin began to promote the use of KPERS money to stimulate the Kansas economy. KPERS's investment consultants , Callan Associates, Inc., advised KPERS in 1983 that investing publi c pension fund moneys a s venture capital to promote regional business would be a high-risk undertaking. Callan advised

### -6-

KPERS not to embark on such a program, but to stick to "more traditional investments." Carlin appointed a Kansas City businessman, Michael Russell , to KPERS’s board of trustees. Russell became ch airman of KPERS's board in August 1985. Russell was a friend and business associate of Kansas City banker Frank Morgan.
In 1985, KPERS established a special "Kansas Investment Fund" t o make direct investments in Kansas ventures. About the same time, Morgan and hi s uncle, Sherman Dreiseszun, bought Home Savings, an ailing thrif t institution based in Kansas City. As part of the acquisition, Morgan and Dreiseszun entered into an agreement with the Fe deral Home Loan Bank Board inwhich they agreed that Home Savings would not engage in transaction s with other banks affiliated with Morgan and Dreiseszun. Because Morgan an d Dreise szun were the "standby purchasers" of Home Savings stock, thi s agreement is known as the "standby purchaser agreement." Russell became
a member of the Home Savings board of directors. He and his businesses ha d borrowed large amounts from Home Savings. KPERS conducted its investments thro ugh outside investment advisors,
one of w hich was Reimer & Koger. Relations between KPERS and Reimer & Koger were governed by a Special Investment Advisory Services Agreement, which incorporated the "prudent man" standard fo r investing KPERS's money. After Russell became chairman of KPERS's board, Frank Morgan invited Reime r & Koger’s principal, Kenneth Koger, to invest $2 5 million of KPERS’s money in Home Savings. Koger only had authority to invest $15 million of KPERS’ s money without board approval, but on December 31 , 1985, Koger committed to invest that amount in Home Savings subordinated debentures. Koger noted ina memo sent to KPERS's executive secretary that Russell was on Hom e Savin gs's board and that "something would have to be done about that. " Accordingly, Russell

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resi gned from Home Savings's board on February 12, 1986. Koger the n invested KPERS’s $15 million in Home Savings subordinated debentures on Ma y 2, 1986. Reimer & Koger retained Blackwell Sanders to do the legal work for this investment. As counsel for Home Savings, Frank Sebree of Shook Hardy i ssued an opinion of counsel in connection with the investment , stating that to the " best of our knowledge and belief, the Association is not i n violation of . . . any agreement, instrument, judgment, decree , order, statute, rule or governmental regulation applicable to it."

Morgan next approached Koger about investing $50 million in Hom e Savings. Because this investment exceeded Koger’s investment authority, Koger had to go to th e KPERS board for permission to make the investment. On June 6, 1986, Koger wrote a letter to Russell proffering the $50 millio n investment; Koger’s letter stated that the purpo se of the investment would be to finance Home Savings’s acquisition of a $1 billion St. Louis savings and loan. Russell telephoned the other members of the KPERS board t o obtain approval of th e investment , and the trustees voted in favor of the investm ent. In June 1986 Home Savings bid on the St. Louis savings an d loan. By th e fall of 1986, Home Savings knew it had lost the bid. O n September 30, 1986, b ecause the parties were not prepared to close on the debentures, KPERS invested in Home Savings short term promissory notes; th e notes were exchanged for subordinate debentures of Home Savings on October 24, 1986. As part of the issuance of the debentures, Sebree again issued
an opinion of counsel to KPERS in which he stated that Home Savings was no t in violation of any agreement or regulation to h is knowledge. However, in actuality, Home Savings had been cited by the bank examiners in its most recent examination for excessive investment in a subsidiary corporation.

### -8- On November 13, 1986 the Kansas City Star reported that KPERS ha d made the $50 million investment in Home Savings. The article quoted Koger
as sa ying that Home Savings had considered buying an unnamed St. Loui s savin gs and loan, but that Home Savings had "pretty much dropped [tha t acquisition] from consideration."

On December 21, 1986 the Kansas City Star published a lengthy investigative article entitled: "Kansas pension fund ventures rais e questions of conflict." The article revealed that Russell had not onl y beenon the Home Savings's board, but that shortly after the $50 million subordinated debentur e purchase, one of Russell's businesses had obtained

a $40 million loan from another Morgan bank. The article quoted interview s withKoger, Russell, and several other KPERS board members about whether there was a conflict of interest because of Russell's directorship an d loans. As a r esult of the Kansas City Star article, the Kansas Attorne y General, Robert Stephan, undertook an investigation of the possible Russel l conf lict. Stephan issued a report on March 4, 1987, concluding tha t Russell had not viola ted the Kansas ethics law, Kan. Stat. Ann. § 46-233, by vi rtue of his Home Savings directorship because the amount of mone y Russell m ade as a director was below the $2,000 amount specified in th e Kansas statute as a " substantial interest," Kan. Stat. Ann. § 46-229, and because Russell had resigned from the directorship by the time of the KPER S investments. Therefo re, the Attorney General's report concluded that the Kansas ethics statute did not bar Russell from p articipating in the making of the Home Savings investment. The Attorney General further considered whether Kansas ethics laws were "appropriate" to protect the fund. Th e Attorn eyGeneral determined that KPERS was adequately protected by th e requirement that KPERS board members exercise "t he judgment and care under the circumstances then prevailing, which men of prudence, discretion

### K PERS agrees that its ultimate recovery following th e 8 

### reg ulatorytakeover was not affected by the conversion of it s investment from debt to equity. Dist. Ct. Order of June 3, 1996 at 36.
-9- and i ntelligence exercise in the management of their own affairs." H e stated: "An attempt to restrict the board any further than this in their investment decisions may prove detrimental to the program." Further, he note d that "borderline conflict situations" were perhaps an inevitabl e result of the "desirable" practice of having "successful businessmen" on the board. Stephan's report did not discuss Rus sell's loan from the other Morgan bank.

In Dece mber 1987 the KPERS $50 million was reinvested in more Hom e Savings subordinated debentures. In connection with the reissue, Sebree again is sued an opinion stating that Home Savings was not, to hi s kno wledge, in violation of any law, agreement, or regulation. However , Home S avings's last examination report stated that Home Savings ha d violated the standby purchasers agreement by buying loans from affiliated ban ks and had violated federal regulations by excessive investment in a subsidiary. ByMay 1988, the bank examiners' criticisms of Home Savings' s affiliate transactions, conflicts of interest, and problem loans had becom e more urgent. The Kan sas City Business Journal reported in September 1988 tha t Home Savings had been criticized by the examiners in its las t examination for affil iate transactions and undercapitalization. As part of an effort to provide Home Savings with sufficient capital to meet the regu latoryrequirements, KPERS converted its debentures into preferre d stock on March 29, 1990. In 1991, the regulators closed Home Savings and 8 appoin ted the RTC as receiver. KPERS lost its entire $65 million i n principal, though it had earlier received some $29 million in interes t payments.

### -10- Peat Marw ick had audited KPERS annually from 1983 to 1988. Because the direct placement investments were difficult to value, KPERS adopted a poli cyof carrying those investments on its books at cost, minus an y permanent impairment. KPERS's investment managers, such as Reimer & Koger , were responsible for reporting to KPERS when the y determined an investment

was p ermanently impaired. The investment advisers were compensate d according to the amount of money they were handl ing for KPERS, which meant that t hey reduced their compensation when they reported an impairment

. Peat Marwick warned KPERS in 1987 and 1988 that its direct placemen t investments were partially impaired and that it needed to establish a n invest ment allowance account to protect it against impairments. Pea t Marwick reported to KPERS's in-house accountants in 1987 and 1988 tha t KPERS had impaired direct placement investments of $10 million and $1 9 million respectively. Peat Marwick nevertheless issued unqualifie d opinions despite the impairments. Peat Marwick's successor auditor, Baird , Kurtz & Dobson, recognized in the 1989 audit tha t KPERS's direct placement losses could be as hi gh as $75 million; in response to this report, KPERS set up an investment allowance account and also wrote down its direc t placement investments by $27 million. Reimer & Koger did not write down KPERS's $65 million i nvestment until March 15, 1991, the day Home Savings was placed in receivership.

KPERS initially filed its case on June 5, 1991 in the state court s of Kansas against the Reimer & Koger defendants. On December 23, 1991 , KPERS added the Home Savings defendants , the Peat Marwick defendants, and Russel l. The Home Savings defendants impleaded the Resolution Trus t Corp oration, receiver for Home Savings. The RTC had the power unde r FIRREA, 12 U.S.C. § 1 441a(l)(3) (1994), to remove the case to the Western District of Missouri, which it did. KPERS movedto remand the case to the

### -11-

Kansas court, but the district court denied its motion, and we affirmed in KPERS v. Reimer & Koger Assocs. , 4 F.3d 614 (8th Cir. 1993) ( KPERS I ) , cert. denied , 511 U.S. 1126 (1994).

After KP ERS advised the two law firms, Blackwell Sanders and Shoo k Hardy, that it intended to sue them in Kansas, both firms moved t o int ervene in this case. The court granted Shook Hardy's motion t o interv ene, but denied permission to Blackwell Sanders. However, w e reversed, permitting Blackwell Sanders to intervene as well. KPERS v
. Reimer & Koger Assocs. , 60 F.3d 1304 (8th Cir. 1995) ( KPERS II ). KPERS sue d Black well Sanders in Kansas state court on January 6, 1995. Blackwel l impl eaded the RTC, which removed the case to the Western District o f Missouri. KPERS’s complaint (by now, its Sixth Amended Complaint) is pleade d in fifteen counts andasserts a variety of theories, including common law fr aud, statutory securities fraud, various breaches of fiduciary an d professional duties, negligence, breach of contr act, and civil conspiracy. There are a few crucial factual allegations relevant to most of th e differe nt legal theories. First, KPERS alleges that the Home Saving s defendants and Reimer & Koger misrepresented that Home Savings would use KPERS’s $50 million investment to buy a $1 billion St. Louis savings and loan. KPERS alleges that Home Savings actually knew when it received the $50 million that it would not use the money to buy the St. Louis savings and loan, because Home Savings needed the money to raise its capital level to the re gulatory minimum. KPERS alleges Reimer & Koger knew the mone y would not be so used, but failed to tell KPERS. KPERS alleges that Russel l told the other KPERS trustees that the money would be used to buy the St. Louis savings and loa n. Second, KPERS alleges that Sebree issued opinion let ters on behalf of Home Savings saying that Home Savings was not i n violation of any governmental regulation or agreement, when in fact Home Savings

### -12-

was in violation of the standby purchaser agreement it had entered with th e Federal Home Loan Bank Board and had excessive investments in one of its subsidiaries. Third, KPERS alleges that the Home Savings defendants made several statements about the quantum of risk in their lending portfolio, and that t hese statements were false because the credit risk was muc h higher due to high risk transactions done to benefit other Morgan banks. Similarly, KPERS claims Reimer & Koger and Blackwell Sanders failed t o advi se KPERS of the high-risk nature of the Home Savings investment

. Fourth, KPERS alleges that Russell made false statements to the other KPER S trustees in order to procure KPERS's money for Home Savings so that Home Savings's affiliates would, in turn, lend him $40 million. KPERS claims that the Home Savings defendants, Shook Hardy, Blackwell Sanders and Reime r & Koger pa rticipated in Russell’s breach of duty by failing to revea l Russell’s conflicts of interest to KPERS. Final ly, KPERS alleges the Peat Marwick defendants' failure to identify and writ e off impaired investments caused KPERS to overv alue its investment in Home Savings and prevented it from discovering the wrongdoing of other defenda nts and from taking action to stop its losses. The Home Savings defendants moved for summary judgment on the g rounds that KPERS's claims w ere time-barred. The district court determined that Kansas choice of law rules should govern the cho ice of limitations law and that the applicable Kansas period was provided by a ten-year statut e
ena cted especially to govern civil actions brought by KPERS, Kan. Stat

. Ann. § 60-522 (1994). In an interlocutory appeal, we reversed, holdin g that Missouri choice- of- law rules governed, and that the ten-year Kansas statute did not purport to revive barred claims. KPERS III , 61 F.3d a t 615. In KPERS III we held that "the Missouri borrowing statute requires the district court to apply the Kansas two- and three-year statutes [Kan. Stat. Ann. §§ 60-513(a) and 60-512] to KPERS’ claims if the

### KPERS has also appeared before us in matters arising out o f 9 

### the same underlying case, but not directly relevant to the issues here. In KPERS v. Reimer & Ko ger Assocs. , 77 F.3d 1063 (8th Cir.) ( K PERS IV ), cert. denied , 117 S. Ct. 359 (1996), we affirmed a di strict court order enjoining KPERS from prosecuting suits i n Kansas state court based on the same claims being litigated in this case. In In re KPERS , 85 F.3d 1353 (8th Cir. 1996) ( KPERS V ), we denied KPERS's petition for writ of mandamus directing the d istrict judge to recuse himself.
-13- claims would be 'full y barred' by these statutes (a finding of fact which has not been made)." Id. We remanded for the district court to determine 9 whether KPERS's claims were barred by these statutes. Id.

On remand , all the defendants moved for summary judgment on th e grounds that KPERS’s claims were barred by the Kansas two-year tor t statu te, Kan. Stat. Ann. § 60-513(a) (1996 Cum. Supp.), and the Kansa s three-year statute fo r statutory claims, Kan. Stat. Ann. § 60-512 (1994). The district court held that the defendants were entitled to summar y judgment on the ground that KPERS’s claims were time-barred. Orders o f June 3, 1996 (Home Savings defendants, law firm defendants, and Reimer & Koger defendants), July 25, 1996 (Peat Marwick defendants); and March 4, 1997 (Russell). The court also denied KPERS's motion to amend its Sixth Amen ded Complaint to add a breach of contract claim against the Pea t Marwick defendants. Order of August 5, 1996.

The district court first considered the summary judgment motion o f the Reimer & Koger defendants. The court concluded that, even though KPER S pleaded one of its claims as a breach of the Special Investment Advisory Services contract, the Kansas two-year tort statute would apply to al l KPE RS’s claims against Reimer & Koger, because KPERS’s contract did no t call for a specific result, but simply required discharge of duties impose d by law by virtue of

### -14-

the contract. Order of June 3, 1996, slip op. at 43-45 (citing Hunt v. KM G Main Hurdman , 839 P.2d 45, 47 (Kan. Ct. App. 1992)).

Therefore , the court held that KPERS’s claims against the Reimer & Koger defendants woul d be barred if they had accrued before June 5, 1989, two years before KPERS filed suit against the Reimer & Koger defendants. Id. at 45. Under Kansas law, the statute of lim itation would begin to run at the time it was reasonably ascertainable that the plaintiff had suffere d
an injury caused by the defendant’s wrongdoing. Id. at 46 (citin g Dearborn Animal Clinic, P.A. v. Wilson , 806 P.2d 997 (Kan. 1991)). Th e court held that the evidence showed the KPERS bo ard of trustees had actual knowledge before June 5, 1989, of the facts KPERS now alleges Reimer & Koger failed to tell KPERS about: that Home Savings was no longer plannin g to use K PERS's $50 million to buy the St. Louis savings and loan; tha t Russe ll was a director of Home Savings and borrowed money from anothe r Morgan ba nk; and that Home Savings was engaged in risky real estate an d commercial lending. Id. at 47-48, 52.

Alterna tively, the court held that even if the KPERS board did no t have actual knowledge about these things, Reimer & Koger’s knowledge could be imputed to KPERS because Reimer & Koger was KPERS’s agent and a n agent’s knowledge can be imputed to its principal. Id. at 49-50.

The court also rejected KPERS’s argument that Reimer & Koge r concealed the facts from KPERS and therefore the statute should be tolled. The court held that no reasonable finder of fact could conclude that Reime r & Koger intentionally concealed information from KPERS. Id. at 54.

### -15- The c ourt held that the same knowledge that caused KPERS’s claim s against Reimer & Koger to accrue before June 5, 1989 would also bar it s
common law tort claims against the Home Savings defendants, which wer e filed seve ral months later than the claims against the Reimer & Koge r defendants. Id. at 60. KPERS also sued the Home Savings defendants for statutory securities fraud, which has a three-year statute of limitation, Kan. Stat. Ann. § 60- 512; see Kelly v. Primeline Advisory, Inc. , 889 P.2d 130, 134 (Kan. 1995). The court held that KPERS had knowledge of the key facts by December 23, 1988, which meant that its statutory claims against the Home Savings defendants were also barred. O rder of June 3, 1996, slip op. at 61.

The claim s against Shook Hardy and Blackwell Sanders were even more obviously barred, since Shook Hardy did not move to intervene until Octobe r 14, 1994, id. at 64, and KPERS did not sue Blackwell Sanders until January 6, 1 995, id. at 67. The same facts relevant to the claims against th e other defendants barred KPERS’s suits against these two law firms lon g before the suits were brought. Id. at 64-65, 69. In a separate order, the court held that the claims against the Peat Marwic k defendants were barred by the two-year statute of limitation

. KPE RS claims Peat Marwick misled it by signing off on audits of KPER S without advising KPER S that its Home Savings investments were impaired or that it should establish an investment allowance account. The cour t pointed to a number of facts that would cause th e statute to begin running before December 23, 1989, including the fact that Peat Marwick stated in its 1987 and 1988 aud itor’s reports that some of KPERS’s direct placement inv estments were impaired and recommended that KPERS establish a n investment allowance account. Order of July 25, 1996, slip op. at 21

. Moreover, by September 30, 1989, after an audit by a new auditor,

### -16-

Baird, Kurtz & Dobson, KPERS established an investment allowance account and wrote off a portion of its direct placement investments. Id. at 22.

I.
KPERS makes threshold legal arguments that its claims are not s ubject to any statute of limitation.
We review a grant of summary judgment de novo. See Uhl v. Swan strom , 79 F.3d 751, 754 (8th Cir. 1996). Summary judgment is proper when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); see Celotex Corp. v. Catrett , 477 U.S. 317, 322 (1986). We also review de novo the distric t court's determination of questions of state law. See Salve Regina College v. Russell , 499 U.S. 225, 231 (1991).

In KPERS III we held that Missouri limitations law governed thi s case and that under Missouri's borrowing statute the Kansas two- and three-year statutes of limitation applied to KPERS's claims if those statutes fully ba rred the claims. 61 F.3d at 614-16. The law of the case doctrin e prevents the relitigation of a settled issue in a case and requires courts to adhere to decisions made in earlier proceedings. See Little Earth of the United Tribes, In c. v. United States Dep't of Hous. & Urban Dev. , 807 F.2d 1433, 1441 (8th Cir. 1986). The law of the case doctrine applies to issue s decided implicitly as well as those decided explicitly. Id. a t 1438. We are satisfied that the law of the case doctrine prevents KPERS from relitigating the issue of whether these sta tutes apply to its claims. See Unite d States v. Duchi , 944 F.2d 391, 392-93 (8th Cir. 1991). W e recognize that the law of the case

### KPERS argues that the Missouri common law doctrine of 10 

### nullum tempus occurrit regi bars all statutes from running against a claim by the state. The Kansas Supreme Court has held in State Highway Commission v. Steele , 528 P.2d 1242, 1243-44 (Kan. 1974), that enactment of section 60-521, Kan. Stat. Ann. § 60-521 (1994), abolishes this doctrine where public bodies are operating in a proprietary capacity. Further, the doctrine has been applied by most states only to actions brought by a state in its own courts. See , e.g. , Pennhurst State Sch. v. Estate of Goodhartz , 200 A.2d 112, 116 (N.J. 1964).
-17- doct rine does not apply when it results in a manifest injustice, an d therefore we briefly discuss the merits of KPERS 's arguments for exemption from the statutes of limitation.

A.

KPERS arg ues that its investment in Home Savings was a governmental function, and therefore, its claims arising out of that investment are not subject to any statute of limitation.

The Kans as Supreme Court has stated that "[m]aintaining KPERS is a proprietaryfunction of the state." In re Midland Indus. , 703 P.2d 840, 843 (Kan. 1985) (discussing the holding of Shapi ro v. KPERS , 532 P.2d 1081 (Kan. 1975)). In Sha piro , the Kansas Supreme Court rejected the argument that sovereign immunity barred payment of intere st on a claim for benefits made by an employee's widow. Shapiro , 532 P.2d at 1085. Shapiro looked to the statutes creating KPERS as a body corporate with the power to sue and be sued, and held that if a government enter s into business ordinarily reserved to the field of private enterprise, it should be held to the same responsibilities and liabilities. Id. at 1083-84. A member of KPERS or his beneficiary should be provided the same protection and the same redres s
as if the breach of contract had been committed by a private insuranc e company. Id. at 1084-85. While the issue in Sh apiro involved a claim for benefits only, Midland 's explanation of the holding in Shapiro demonstrate s the broad scope of the ruling. These clear holdings compel rejection of KPERS's argument. 10

### KPERS argues that we should certify to the Kansas Supreme 11 

### Court several issues presented in its appeal, including the issue of governmental immunity. In KPERS III we decided that the Missouri borrowing statute required the application of the Kansas two- and three-year statutes of limitation. 61 F.3d at 615. KPERS's petitions for rehearing en banc and for certiorari were denied. Our ruling in KPERS III is the law of the case, and we reject the suggestion that these issues be certified to another tribunal.
-18- Indeed, the Kansas legislature in enacting section 60-522, Kan. Stat. Ann. § 60-522 (1994), which we discussed at length in KPERS III , ha s acknowl edged that statutes of limitation run as to claims asserted b y KPERS.

KPERS has made extended arguments that its operations ar e governmental functions as opposed to proprietary. The Kansas Supreme Cour t has made clear that an activity is a proprietary function if it i s
commer cial in character, usually carried on by private parties, o r conducted for profit. See Carroll v. Kittle , 45 7 P.2d 21, 28 (Kan. 1969); State ex rel. Schneider v. McAfee , 578 P.2d 281, 283 (Kan. Ct. App. 1978). KPERS' s actions arising from its investment activities meet thi s description fully, and do not differ from the suit for contractual benefit s involved in Shapiro

. Similarly, KPERS argues that the investments are governmental b ecause the profits reduce the burden on Kansas taxpayer s to fund KPERS, the funds were invested to stimulate the Kansas economy, a nd Kansas statutes require the funds to be inves ted. Insofar as these arguments are not answered by those cases we have cited above, the Kansas Supreme Court's decisions in Wendler v. City of Great Bend , 316 P.2d 265, 269, 274 (Kan. 1957), an d Gro ver v. City of Manhattan , 424 P.2d 256, 259 (Kan. 1967), compe l rejection of KPERS's arguments. This analysis also forecloses KPERS' s 11 argument

### -19-

that its claims again st Peat Marwick arise out of governmental functions.

B.

KPER S argues that its claims are not subject to a statute o f limitation because they are actions to recover from a former officer o r employee for his breach of duty. See Kan. Stat. Ann. § 60-521 (1994)

. KPERS did not raise this argument in the district court. KPERS contends that this failure is excused because it raised this argument in the state trial court before this case was removed to the district court.

We have often stated that we will not consider arguments that wer e not presented first to the district court. See Roth v. G.D. Searle & Co. , 27 F.3d 1303, 1307 (8th Cir. 1994). If KPERS intended to rely on it s breach -of-dutyargument, it should have presented that argument to th e distri ct court in opposition to the defendants' motions for summar y judgment. We refuse to consider KPERS's breach-of-duty argument.

C.
KPERS also argues that the state trial court held that KPERS's claims
were not subject to a statute of limitation because the defendant s participated in a former officer's breach of duty and that the distric t court cou ld not ignore the state court's holding. Again, KPERS did no t present this argument to the district court,

### -20-

and we re ject KPERS's attempt to raise this argument for the first tim e before this court. See id.

II.

KPERS argues that the district court erred in its conclusion tha t KPERS had sufficient knowledge to start the statute of limitation running on its claims before December 23, 1988.

KPERS argues that the facts do not s how it had knowledge by December 198 6 that Home Savings was no longer seeking to acquire the St. Loui s savings and loan that Koger advised it about in his June 6, 1986 letter to Russell proffering th e opportunity to invest $50 million in Home Savings. Fir st, KPERS contends that the statements the district court cited wer e only statements that Home Savings would probablynot buy the St. Loui s savin gs and loan, and that statements of probability are not enough t o start the statute of limitation running. (KPERS does not deny that it had knowledge of the statements that the acquisition was unlikely). To th e contrary, Kansas law does not require that the plaintiff have ironcla d actual knowledge abou t his injury, but rather that he have such notice as would permit him to discover the injury with the use of due diligence

. "'Reasonablyascertainable' does not mean 'actual knowledge.'" Davidson

v. Denning , 914 P.2d 936, 948 (Kan. 1996). Accord Miller v. Foulston , Siefkin, P owers & Eberhardt , 790 P.2d 404, 417 (Kan. 1990); Brueck v

. Krings , 6 38 P.2d 904, 908 (Kan. 1982); Kelley v. Barnett , 932 P.2d 471 , 476-77 (Kan. Ct. App. 1997). The public statements that the St. Loui s acquisition was unlikely were enough to put KPER S on notice that its money might not be used to buy the St. Louis thrift.

### -21- KPERS contends that there is an issue of fact about whether i t learn ed before 1990 that the St. Louis acquisition did not go through

. KPE RS points to a memo from outside counsel in Reimer & Koger’s file s asking: "Was it ever explained to KPERS that [Home Savings] did not buy
a big St. Louis association?" Next to this question is the handwritte n response, "No." Even if we took this memo as ev idence that Reimer & Koger did n ot tell KPERS the St. Louis deal did not happen, there is still n o question but that KPE RS was on inquiry notice from other sources cited by the district court, i ncluding the November 13, 1986 article in the Kansas City Star which stated that Home Savings had "pr etty much dropped" the St. Louis deal from consideration. See Brueck , 638 P.2d at 908 (fact of injur y reasonably ascertaina ble from press reports); see also Davidson , 914 P.2d at 947 (plaintiff charged with knowledge of coroner's report). The fact that KPERS enjoyed a fiduciary relation with Reimer & Koger does no t relieve KPERS of the obligation to exercise due diligence. See Miller , 79 0 P.2d at 417. KPERS contends that the district court erred in imputing to KPER S Reimer & Koger’s knowledge of the abandonment of the St. Louis deal. It is not necessary for us to decide whether Reimer & Koger could benefit fro m the imputation of its knowledge to KPERS. Cf. W ietharn v. Safeway Stores, Inc. , 820 P.2d 719, 722-23 (Kan. Ct. App. 1991) . The district court only mentioned imputing Reimer & Koger’s knowledge to KPERS as an alternative ground, there being other evidence, both press r eports and statements that
were actually communicated to KPERS, that established notice independently

. Order o f June 3, 1996, slip op. at 48. For instance, KPERS's executiv e secretaryreceived a copy of an internal Reimer & Koger memorandum fro m Octob er 1986 saying the St. Louis deal was "probably dead." Moreover , after Home Savings ha d failed in its bid for the St. Louis thrift, Reimer & Koger issued

### -22-

letters of intent to KPERS stating that the money would be used by Hom e Sav ings for "general corporate purposes." But most telling, the Kansa s City Star article of November 13, 1986 highlight ed the discrepancy between the original plan to use the $50 million to buy a St. Louis thrift and the current situation in which the St. Louis deal had likely been abandoned an d the parties had not announced specific plans for what to do with the money

. Thus, t here is no need to impute Reimer & Koger's knowledge to KPERS t o
conc lude that the limitations periods necessarily expired before KPER S filed its claims.

KPERS als o argues that even knowledge that Home Savings did not buy the St. Louis savings and loan would not have st arted the statute running, since this would not have shown wrongdoing by Ho me Savings. This argument is difficult to reconcile with KPERS's complaint, since KPERS pleaded as
one instance of fraud that the Home Savings defendants represented the y would use the $50 million to acquire the St. Louis savings and loan , whereas the defendants knew when they received the money that they would not so use it. If KPERS now contends that the untruth it alleged is "no wrongdoing," we can o nly conclude that KPERS has abandoned this theory of fraud , making any discussion of the statutes of limitation moot. Thi s argument certainly does not lead to reversal of the district court's entry of summary judgment.
KPERS also argues that the district court relied on knowledge i mputed fromRei mer & Koger to conclude that KPERS knew of Home Savings’ s involvement in risky lending for the benefit of its affiliate banks and it s violation of the standby purchasers agreement and other bankin g regula tions. Again, any such imputation was superfluous, there bein g sufficient proof that

### KPE RS also states that the district court relied on Koger’s 12 

### testimony about conversations with KPERS’s executive secreta ry that the ex ecutive secretary denied. The "denial" KPERS cites i s simply : "I have no recollection of being informed that [Hom e Saving s] was in violation of contract or federal regulation s concerning affiliated transactions, and I have no reason to believe I ever received such information." But since other, undispute d ev idence exists which is sufficient to support the summar y jud gment, we need not decide if the secretary’s lack o f recollection would be sufficient to create a material issue of fact as to whether the conversations Koger testified about took place. The district court pointed to many other instances of notice 13 

### bef ore the Kansas City Business Journal article. Because th e article is sufficient to establish notice, we have no need t o discuss the other evidence.
-23- knowledge of these facts was public information well within the relevant period. 12

The existence of regulatory problems and unusual credit risk wa s made explicit and public by the Kansas City Business Journal article o f Sep tember 12, 1988, which reported severe criticisms of Home Savings b y federal savings and loan regulators. The article stated:
[A] letter sent 11 weeks ago to Home Savings by fed eral savings and loan regulators toldthe thrift to sever its relationships with other Morgan-group banks because they violatedsavings and loan regulations and contravened an agreement Morgan an d Dreise szunentered into when they acquired [Home Savings] i n 1985. . . . The letter, which was sent by the Federal Hom e Loan Bank of Des Moines, Iowa, on June 20, also cri ticized loan underwriting procedures at the thrift, expressed concern about its lo w level of capital under generally accepted accountin g principles (GAAP) and strongly recommended that it employ a compliance officer.
Such public knowledge is sufficient under Kansas law to put KPERS on notic e that it had been injured. See Brueck , 638 P.2d at 908. If the two-year tort statute began to run when this article was published on September 12, 1988, it expired before June 5, 1991,

13

### -24-

when KPERS sued the Reimer & Koger defendants. The three-year statut e applic able to the securities fraud claims against the Home Saving s def endants would then have expired before December 23, 1991, when KPER S sued those defendants.
As for the alleged failure to reveal Russell’s relationship wit h Home Sav ings, KPERS contends that the statute did not begin to run when i t discovered the facts that Russell had been a Home Savings director and tha t he had obtained a $40 million loan from a Morgan bank shortly after th e KPERS inv estment in Home Savings. KPERS says that it exercised du e diligence after learning of these facts, since t he Kansas Attorney General Robert Stephan investigated the issue and concluded that Russell had not transg ressed Kansas ethics laws. Therefore, KPERS says, under Dearbor n Animal Clinic, P.A. v . Wilson , 806 P.2d 997, 1006 (Kan. 1991), and Gilger

v. Lee Co nstruction, Inc. , 820 P.2d 390 (Kan. 1991), its injury was no t "reasonablyascertainable" until a 1991 Kansas legislative investigation indicated that the loans to Russell were not arms' length transactions, bu t were made after Russell's previous loans were in trouble.

In Dearborn Animal Clinic and Gilger , the plaintiffs relied o n representations by the defendant or by third par ties that put them off the trail of the alleged tort. Dearborn Animal Clinic was a malpractice actio n against a lawyer who was asked to draft a contract to sell stock, bu t instead dr afted an option contract that did not obligate the buyer t o purchase the stock. When the buyer refused to go through with the sale, the sellers retained a new lawyer, who filed sui t to enforce the agreement
onthe theory that it required the purchaser to buy the stock. 806 P.2d at 1006. The

### -25-

Kansas Supreme Court stated that the statute didnot begin to run when the purchaser refused to go through with the sale, since the sellers wer e entitl ed to rely on the expertise of their new lawyer, who was stil l at tempting to enforce their original understanding of the agreement

. Howe ver, the record made clear that by the time the sellers answere d interrogatories in th eir case against the buyer, they knew their contract did not actually require the purchaser to buy their stock. Id. at 1007. At th at time, the statute began to run. Id. In Gilger , the plaintiff s
were poisoned by carbon monoxide from an improperly vented furnace. One of the plaintiffs consulted doctors who misdiagn osed her problems. Gilger

v. Le e Constr., Inc. , 798 P.2d 495, 497 (Kan. Ct. App. 1990). She als o contacted two of the defendants, who told her the furnace was workin g properly. 820 P.2d at 393. Finally, the plaintiffs sought another opinio n and were informed that their furnace was improperly vented. 798 P.2d at 502. The Kansas Court of Appeals held that there was a question of fact as to whether the sta tute began to run before the plaintiffs received the opinion that the furn ace was improperly vented. The Kansas Supreme Court affirmed in relevant part. 820 P.2d at 400-01. In contrast to Dearbornand Gilger , the plaintiff in this case claims that i t was entitled to rely on its own investigation that failed t o
uncove r facts that were actually public knowledge. Throughout thi s litigat ion, KPERS has stressed its identity with the state of Kansas

. KPERS claims it relied on the report of the Attorney General of Kansas, wh o is not a defendant or a third party, but who act s for the state of Kansas. The Kansas Attorney General did not discuss Russ ell’s loans in his report. KPERS does not dispute the fact that the existen ce of those loans was laid bare for the readership of the Kansas City Star . In fact, the Star articl e quotes the Attorney G eneral as saying he would undertake an investigation as a result of the Star story. The Attorney

### -26-

General's report conc luded that Russell's former position as Home Savings director did not violate existing Kansas statutes, and that the existing laws were sufficient to address the "most egregious" conflicts. Th e Attorney General stressed the importance of having "successful businessmen "
onthe KPERS board and concluded that some "borderline" situations might be an inevitable concomitant of having such board members. Whatever the
reaso nfor the Attorney General's failure to discuss the loans, a plaintiff's choice not to follow up on information in his possession canno t benefit the plaintiff and disadvantage the defendants. Gilger and Dearbor n require a plaintiff to exercise due diligence. KPERS cannot use the Kansa s Attorney General’s report to toll the statute against the defendants.

KPERS a lso argues that the district court erred in saying that th e statute of limitation began to run before Decemb er 1 and December 8, 1987, whe nthe $15 million and $35 million components of the $50 millio n investment finally closed. The district court h eld that the statute began to run in December 1986, see , e.g. , Order of Jun e 3, 1996, slip op. at 51; wherea s, the $50 million was actually invested and reinvested severa l times, with the last issues of subordinated debentures occurring o n December 1 and 7, 1987. However, the fact that KPERS may have chosen to reinvest the money after becoming aware of the facts it says were initiall y hidden from it does not change the result here. If KPERS contends that it inv ested its money after it knew or should have known of the relevan t facts , then it concedes away the reliance element of its fraud claims

. This argument may moot the statute of limitationquestion, but it does not affect the propriety of the district court’s grant of summary judgmen t against KPERS. In any case, even if the statute began to run on the date of the last investment, December 7, 1987, the re levant two- and three-year periods still

### -27-

expired before KPERS filed suit. Therefore, this argument does not help KPERS.

KPERS argues that the Reimer & Koger defendants’ breaches of dut y continued into 1990, when Reimer & Koger allegedly concealed facts about Home Savings’s financial condition in order to induce KPERS to trade its subordinated debentures for preferred stock. If this argument is meant to establish a tort based on KPERS's conversion from debt to equity, KPERS ha s made concessions fatal to its claim. The district court recited: "KPERS agrees that its 'ultimate recovery following the OTS takeover was in no wa y different due to the conversion from debt to equity which occurred in Marc h of 1990.'" Order of June 3, 1996, slip op. at 36. KPERS contends that the district court improperly constricted K PERS’s claims against the Pe at Marwick defendants to: failing to tell KPERS its Home Savings investme nt was impaired; and failing to tell it to establish

an inves tment allowance account. KPERS says that this ignores it s alleg ations that Peat Marwick was the auditor for Home Savings. KPER S alleges Peat Marwick did not reveal a conflict of interest so profound tha t it sho uld have disqualified Peat Marwick from auditing Home Savings , because, among other things, the managing partner of Peat Marwick’s local office was deeply ind ebted to Home Savings and other Morgan banks and was infinancial distress. These allegations do not constitute a separat e cause of action, but are only an elaboration on the basic contention that Peat M arwick failed to alert KPERS to its losses on the Home Saving s inves tment, which kept KPERS from discovering the other defendants ' breaches of duty and from acting to stop its losses. The district court held that KPERS was put on notice that the 1987 and 1988 financials did no t reflect the true value of the direct placement investments and that this notic e occurred at least by the date of the successor auditor's repor t (September 30, 1989)

### -28-

showing as much as $75 million in impaired inves tments. Order of July 25, 1996, slip op. at 22. Pointing to additional facts KPERS claims it did no t know cannot relieve KPERS of the consequences of what it clearly did know. KPERS contends that the successor auditor's finding that the direc t placement investments were impaired did not include a specific finding tha t the Home S avings investment was impaired. Again, Kansas law does no t require that the plaintiff have particularized knowledge of the facts of the negligence, but rather that the plaintiff respond to such notice a s would cause a reasonably diligent person to investigate. See Kelley v

. Barnett , 932 P.2d at 477. After learning there was a problem with th e valuation of its direct placement investments, KPERS was not entitled to sit idly by waiting for Peat Marwick to cite chapter and verse.

III.

KPE RS also argues that the district court erred in denying i t permission to amend its Sixth Amended Complaint to state a claim against the Peat Marwick defendants for breach of contract. The district court se t February1, 1995, as a deadline to amend pleadings, and KPERS filed this motion on November 15 , 1995. Denying an eleventh-hour request to amend a Sixth Amended Complai nt after the deadline for such amendments has passed is a decision well within the district court's discretion. See Williams

v. Little Rock Mun. Water Works , 21 F.3d 218, 224 (8th Cir. 1994). We wil l not reverse on this ground. In any event, KPERS's argument that its claim s against Reimer & Koger and Peat Marwick could sound in contract is contrar y to Kansas law, since KPERS does not allege breac h of a contract to achieve a specific result. S ee KPERS v. Reimer & Koger Assocs. , No. 75,487, 1997 WL 186988, at *3 (Kan.

### -29-

April 18, 1997); Hunt v. KMG Main Hurdman , 839 P.2d 45, 48 (Kan. Ct. App. 1992).

IV.

To preserve its position for further proceedings, KPERS renews it s argument that we erred in affirming the injuncti on in KPERS IV , 77 F.3d at 1065. KPERS acknowledges that the KPERS IV decision is law of the case; therefore, we need not discuss this argument.

We affirm the orders of the district court.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.