Opinion ID: 1125431
Heading Depth: 1
Heading Rank: 7

Heading: dbsi's breach of fiduciary duty claim was barred by the statute of limitations.

Text: The gravamen of DBSI's claim of breach of fiduciary duty contained in Count V of its First Amended Complaint is that by failing to manage and maintain books, accounts and records of the projects in a reasonable manner consistent with FmHA regulations, WSDC breached its fiduciary duty and caused delays in the financial audits and FmHA approval. DBSI claimed it was damaged in the amount of $937,133.00 as a consequence of the transfers occurring after the effective date of the FmHA's change in the amortization method. In addition, DBSI claims that these alleged breaches resulted in approximately $129,944.00, exclusive of interest, in excessive management fees paid by DBSI to WSDC. The district court determined that any breach in fiduciary duty would have had to: have arisen during or prior to the completion of the Touche Ross audit, which was completed and delivered on April 8, 1986. By this time all of the deficiencies and defects claimed by the plaintiff were fully revealed. Plaintiff's original complaint in this matter was filed May 11, 1990, more than four years later. The claim is barred by the statute of limitations included in either I.C. § 5-217 or 5-224. The district court went on to say, Under the most favorable interpretation of the facts, the limitations period had to have started no later than April 8, 1986, the date the 1984 financial audits were finalized by Touche Ross ... which fully disclosed the accounting and compliance problems. The statute of limitations for breach of fiduciary duty begins to run when the beneficiary knows or should by the use of ordinary care have known of a breach or a repudiation of the trust by the trustee. First Bank & Trust of Idaho v. Jones, 111 Idaho 481, 485, 725 P.2d 186, 190 (Ct.App. 1986) (quoting G.G. BOGERT AND G.T. BOGERT, HANDBOOK OF THE LAW OF TRUSTS § 170, at 642 (5th ed.1973)). DBSI reasons that, because WSDC had exclusive possession of the Project assets, a trust was created such that the statute of limitations for breach of fiduciary duty is tolled until the trust is repudiated and such conduct is unequivocally made known to the beneficiary, as in Harbaugh v. Myron Harbaugh Motor, Inc., 100 Idaho 295, 597 P.2d 18 (1979). This argument is not persuasive. WSDC owed DBSI fiduciary duties as its agent not as its trustee. The fact that WSDC may or may not have exclusively managed the assets of the Projects on behalf of DBSI does not turn an agency relationship into a trust. A trust creates a fiduciary relationship in which the trustee is the holder of legal title to the property subject to the beneficial interest of the beneficiary. Estate of Hull v. Williams, 126 Idaho 437, 443, 885 P.2d 1153, 1159 (Ct.App.1994) (citing 1 GEORGE GLEASON BOGERT, THE LAW OF TRUSTS AND TRUSTEES § 1 (revised 2d ed.1984); RESTATEMENT (SECOND) OF TRUSTS § 2 (1957)). The essential characteristics of a trust relationship are separation of the legal title from the beneficial interest and the existence of fiduciary duties. Id. (citing In re Eggan's Estate, 86 Idaho 328, 337, 386 P.2d 563, 568 (1963)). Although the duties attendant to an agency are frequently compared to those involved in a trust, see 3 AM JUR 2D Agency § 210 (1986), an agency is not a trust. RESTATEMENT (SECOND) TRUSTS § 8 (1957). In this case, WSDC did not hold title to the property for the beneficial interest of DBSI. In addition, this Court has said that the intent of the depositor to create a trust will prevail. Vaughan v. First Fed., 85 Idaho 266, 276, 378 P.2d 820, 825 (1963). The Agreements refer to WSDC as an agent not a trustee and indicate, although not conclusively, that even DBSI did not intend to create a trust in allowing WSDC exclusive management. The district court correctly determined that the statute of limitations started to run when DBSI knew or should have known of a breach rather than being tolled until the repudiation of the fiduciary relationship.