Opinion ID: 777498
Heading Depth: 2
Heading Rank: 3

Heading: Timeliness of the Fraud Claim

Text: 24 Horbach had five years from the date he knew or reasonably should have known that the defendants had perpetrated a fraud upon him in which to file suit. 735 ILCS 5/13-205. Horbach did not actually discover the alleged fraud until February 1991, when his agent inspected the pyrolysis equipment. He filed suit within five years of that date; but the question presented here is whether he should have known of his injury sooner. Specifically, we must ask whether Horbach should have discovered his injury sooner than September 1990 (five years before he brought suit). The district court thought that he should have done so, given that Shred Pax had informed Horbach that the equipment was ready for testing in April 1990 and a simple inspection would have revealed that the system had not been completed. Horbach contends that the district court was not entitled to make this determination as a matter of law. He suggests that in view of the complexity of the equipment, his own lack of expertise, and the modifications he had asked Shred Pax to make, the only way to determine whether the system met the specifications set forth in the purchase order was to test it, and this he was not in a position to do before September of 1990. The mere fact that a visual inspection would have identified the alleged fraud does not mean that he was obligated to conduct such an inspection, Horbach argues. 25 We agree with the district court, however, that Horbach's own allegations reveal that he could and should have discovered his injury prior to September of 1990. Although Horbach makes much of the complexity of the pyrolysis system, his own lack of expertise, and the need for testing (which imposed its own set of demands) to determine whether the machinery conformed to the purchase order, the complaint makes clear that Shred Pax's purported fraud was readily apparent to the naked, non-expert eye. When Horbach's agent visited the Portland facility, he found no pyrolysis system at all, but only scattered components, and the components that he could see did not conform to specifications. R. 20 ¶ 80. Thus, the complexity of the machinery did nothing to cloak Shred Pax's purported fraud. Shred Pax's alleged misrepresentation — that the system was complete and ready for testing — would have been immediately apparent to anyone conducting an inspection. Under these circumstances, Horbach's delay in making such inspection was not reasonable. Shred Pax had announced the completion of the equipment, both parties apparently assumed that testing of the equipment was imminent, Horbach had already paid well in excess of $1 million for the equipment, and Shred Pax was charging TyrRee and Horbach a monthly storage fee for the equipment pending the selection of a permanent installation site. For all of these reasons, we believe that Horbach should have discovered Shred Pax's alleged fraud prior to September of 1990. The district court correctly dismissed the fraud claim as untimely.