Opinion ID: 4538516
Heading Depth: 4
Heading Rank: 2

Heading: Equitable Estoppel and Equitable Tolling

Text: The Ritchie entities also contend their claims are timely under the doctrines of equitable estoppel6 and equitable tolling. They argue they were unable to unravel Petters’s fraudulent scheme because their lawsuit against Petters — in which they intended to conduct discovery — had been stayed and enjoined. Further, the Ritchie entities complain, JP Morgan fought discovery in other litigation to which it was not a party through 2013, which prevented them from understanding JP Morgan’s alleged role in the fraud. With these allegations, the Ritchie entities seek application of equitable estoppel and equitable tolling. We hold neither is appropriate under Illinois law. To establish equitable estoppel under Illinois law, the Ritchie entities must demonstrate six elements: (1) the defendants concealed or misrepresented material facts; (2) the defendants knew the representations were untrue when they were made; 6 In their reply brief, the Ritchie entities argue this court should apply fraudulent concealment under 735 Ill. Comp. Stat. 5/13-215, which they maintain is similar to equitable estoppel. Because they first mentioned this argument in their reply brief, we do not consider it here. See United States v. Martinson, 419 F.3d 749, 753 (8th Cir. 2005). -19- (3) the Ritchie entities did not know the representations were untrue, both when the defendants made them and when the Ritchie entities acted upon them; (4) the defendants intended or reasonably expected the Ritchie entities to act upon the representations; (5) the Ritchie entities reasonably relied upon the misrepresentations in good faith and to their detriment; and (6) the Ritchie entities were prejudiced by their reliance. See Parks v. Kownacki, 737 N.E.2d 287, 296 (Ill. 2000). “The gist of the doctrine is that ‘one cannot justly or equitably lull his adversary into a false sense of security, causing him to subject his claim to the bar of the statute, and then plead the very delay caused by his course of his conduct.’” Anderson v. Holy See, 878 F. Supp. 2d 923, 935 (N.D. Ill. 2012) (quoting Beynon Bldg. Corp. v. Nat’l Guardian Life Ins. Co., 455 N.E.2d 246, 252 (Ill. App. Ct. 1983)). The only specific allegation against any defendant that would potentially implicate equitable estoppel is made against JP Morgan. According to the Ritchie entities, JP Morgan thwarted their efforts in discovery to obtain information revealing the defendants’ purported role in Petters’s scheme, by first not responding to a subpoena duces tecum issued in May 2010 in a New York bankruptcy action, and later by getting a protective order against such discovery. We fail to see how this apparently routine discovery fight over documents lulled the Ritchie entities into a false sense of security, causing them to delay bringing their claims. It would be one thing if JP Morgan falsely represented to the Ritchie entities that it had turned over all relevant documents and the Ritchie entities relied on that representation to conclude no cause of action existed against JP Morgan. In such a scenario, all elements of equitable estoppel may very well be met. But here, the Ritchie entities have failed to establish that JP Morgan lulled them into delaying their lawsuit by lawfully resisting their efforts to obtain documents through third-party discovery. We therefore agree with the district court that the Ritchie entities have not met their burden of showing the doctrine of equitable estoppel applies here. -20- As for the doctrine of equitable tolling, Illinois law provides that the doctrine “may be appropriate if the defendant has actively misled the plaintiff, or if the plaintiff has been prevented from asserting his or her rights in some extraordinary way, or the plaintiff has mistakenly asserted his or her rights in the wrong forum.” Clay v. Kuhl, 727 N.E.2d 217, 223 (Ill. 2000). However, “[w]hile equitable tolling is recognized in Illinois, it is rarely applied.” Am. Family Mut. Ins. Co. v. Plunkett, 14 N.E.3d 676, 681 (Ill. App. Ct. 2014). The Ritchie entities have failed to point us to any Illinois case supporting their contention that the doctrine should apply here. In fact, we are only aware of two cases where Illinois courts have applied the doctrine. See Williams v. Bd. of Review, 948 N.E.2d 561, 567–72 (Ill. 2011); Ralda-Sanden v. Sanden, 989 N.E.2d 1143, 1148–49 (Ill. App. Ct. 2013). Williams is not helpful to the Ritchie entities’ argument because the Illinois Supreme Court was applying federal law to determine whether a federal statutory bar should be tolled. 948 N.E.2d at 567. The case thus tells us nothing about Illinois law. And Ralda-Sanden involved factual circumstances dramatically different and more extreme than those alleged by the Ritchie entities. 989 N.E.2d at 1148–49 (holding equitable tolling permitted a woman to bring a complaint to establish the paternity of her father where her mother withheld information that the father was alive due to threats to kill her and her family). We are thus unconvinced that Illinois law permits us to apply this “rarely applied” doctrine here, where similarly exceptional circumstances are lacking. In sum, we conclude neither equitable estoppel nor equitable tolling apply under Illinois law.