Court Opinion

ID: 3016978
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:16:23.817411+00
Date Added: 2024-06-11T08:53:04.954826
License: Public Domain

_____________

                                 No. 95-1355
                                _____________

Marvin Klehr and Mary Klehr;           *
                                       *
           Plaintiffs-Appellants,      *
                                       *
William G. Olson,                      *
                                       *
           Intervenor,                 *     Appeal from the United States
                                       *     District Court for the
     v.                                *     District of Minnesota.
                                       *
A.O. Smith Corporation;                *
A.O. Smith Harvestore Products,        *
Inc., Jointly and Severally,           *
                                       *
           Defendants-Appellees.       *

___________________________

MVBA Harvestore Systems,

           Movant.

                                _____________

                         Submitted:   October 18, 1995

                             Filed: June 6, 1996
                                _____________

Before FAGG, HEANEY, and HANSEN, Circuit Judges.
                              _____________

HANSEN, Circuit Judge.

     Marvin Klehr and Mary Klehr (Klehrs) appeal from the district
court's1 entry of summary judgment against them on their various Minnesota
state law and Racketeer Influenced and Corrupt

     1
      The Honorable Michael J. Davis, United States District
Judge for the District of Minnesota.
Organizations Act ("RICO") claims.    These claims are premised upon alleged
misrepresentations made by defendant A.O. Smith Harvestore Products, Inc.,
a subsidiary of defendant A.O. Smith Corporation (collectively "AOSHPI"),
and AOSHPI's authorized local dealer, MVBA Harvestore Systems, concerning
a Harvestore silo that the Klehrs purchased.   The district court ruled that
the Klehrs' claims were barred by the statute of limitations.          Klehr v.
A.O. Smith Corp., 875 F. Supp. 1342 (D. Minn. 1995).      We affirm.

                                        I.

     The Klehrs operate a dairy farm in Minnesota.    In approximately 1974,
they purchased a Harvestore silo manufactured and marketed by AOSHPI and
sold by MVBA.    Richard Deutsch, a salesman for MVBA, provided the Klehrs
with information about Harvestore silos before and after the Klehrs
purchased the Harvestore, and he also served as their local contact when
they had problems with the unit.

     The fulcrum for the Klehrs' claims relates to certain representations
made by AOSHPI concerning a Harvestore silo's unique "oxygen limiting"
feature.   Marvin Klehr was an experienced dairy farmer and knew that mold
and spoilage in livestock feed are caused due to the feed's exposure to
oxygen, and that moldy and spoiled feed would be harmful to his dairy herd
if fed to it.    According to the Klehrs, AOSHPI represented that because the
Harvestore silos were sealed, feed stored in the unit would have almost no
exposure to oxygen, thereby virtually eliminating problems with moldy or
spoiled feed.2    This would result in higher feed quality, which in turn
would eliminate the need to add protein supplements to the herd's daily
feed ration.    It would also improve

     2
      Some of AOSHPI's promotional materials apparently likened a
Harvestore silo to a giant sealed fruit jar.

                                     -2-
the health of the herd and increase milk production at a rate of three to
five pounds of milk per cow per day.       All of these purported benefits would
ultimately increase the profitability of the Klehrs' dairy operation.
Although   a   Harvestore   silo   was    considerably   more   expensive   than   a
conventional stave silo, which the Klehrs also considered purchasing, it
was explained to the Klehrs that Harvestore's unique "oxygen limiting"
feature justified the higher cost of the unit and that the unit would pay
for itself in four to five years.        The Klehrs recognized, however, that all
of the promised virtues of a Harvestore unit hinged upon the efficacy of
the structure's "oxygen-limiting" feature.

     Despite AOSHPI's representations, the Klehrs experienced a myriad of
problems after the Harvestore unit was installed.          In July and August of
1976, Marvin Klehr observed white chunks of mold in the haylage3 he removed
from the unit.    He contacted Deutsch, who assured him that the mold was
normal and simply the product of a minute quantity of oxygen that entered
the top hatch of the unit when it was being filled.4            Deutsch explained
that the Klehrs could expect a thin layer of mold each time the Harvestore
was filled because of the small amount of oxygen that would flow into the
unit during the filling process.         The Klehrs accepted this explanation.

     In the spring of 1977, Marvin Klehr again noticed chunks of mold in
the feed and also observed that the feed had become unusually dark brown
and smelled musty.    Marvin Klehr loaded the spoiled feed into a manure
spreader and dumped it on one of his

     3
      "Haylage" in the context of this case refers to chopped
alfalfa silage stored in a silo at a designated moisture content
to promote fermentation.
     4
      A Harvestore silo is filled through an open hatch at the
top of the structure and unloaded by way of a chain-type unloader
at the bottom of the unit. During the unloading process, so-
called "breather bags" at the top of the silo expand to prevent
oxygen from entering.

                                         -3-
fields.   Marvin Klehr made the same observations in the spring of 1978 and
undertook the same action.   This process was repeated each spring, with the
amount of moldy or spoiled feed always ranging from one to two manure
spreader loads.5

     The Klehrs' dairy herd also began suffering from various health
problems after the Klehrs started feeding the herd haylage stored in the
structure.   Some of the health problems had not previously afflicted the
herd, while other maladies began occurring with much greater frequency.
These ailments included: displaced abomasums or "twisted stomachs," "foot
problems," swelling and bruises around the joints in the cows' hind legs,
cows "going off feed," unusually thin and unthrifty cows, cows having rough
hair coats and dull eyes, a higher rate of uterine infections, and more
diarrhea and digestive problems than normal.     Further, the Klehrs' herd
began having certain breeding and reproductive problems, such as poor
conception rates, longer calving intervals, and spontaneous abortions.

     Additionally, the Klehrs never realized the numerous benefits AOSHPI
represented the Harvestore unit would provide, namely, an increase in milk
production, elimination of protein supplements, and ultimately, an increase
in profitability of the dairy operation.     In fact, although their dairy
operation had been profitable prior to their purchase of the Harvestore,
the Klehrs

     5
      The only exception to this process was that in
approximately the spring of 1982, Marvin Klehr noticed a much
greater quantity of moldy and spoiled feed than he had previously
observed. The feed was much darker brown and contained
significantly more and larger chunks of mold. He immediately
ceased feeding his dairy herd feed from the Harvestore unit and
subsequently emptied approximately 12 manure spreader loads of
spoiled feed from the unit. Deutsch and AOSHPI officials later
made repairs to the unit. Thereafter, the process returned to
what it had previously been -- one to two manure spreader loads
of spoiled or moldy feed emptied from the unit each spring.

                                    -4-
experienced financial hardship after they started using the Harvestore.
Despite   all of this, the Klehrs never questioned Deutsch about the
inability to eliminate protein supplements or the lack of increase in milk
production or profitability until 1990.    The Klehrs did consult a number
of nutritionists and veterinarians during the years after they purchased
the Harvestore concerning several of the herd's health and reproductive
problems, but they never asked these consultants whether the Harvestore
could have been the source of the problems.    Finally, the Klehrs did not
examine records which they possessed which would have illustrated to them
that their herd's milk production was below that of other local herds and
that   the herd's milk production and the profitability of the dairy
operation had not increased since the Harvestore was installed.

       In 1991, Marvin Klehr saw an article in a Minneapolis, Minnesota,
newspaper regarding a claim concerning a Harvestore unit that had been made
against AOSHPI in Minnesota state court.        Marvin Klehr subsequently
contacted a University of Minnesota veterinarian, Dr. William Olson, about
a health problem with his herd; in April of 1991, Dr. Olson visited the
Klehrs' farm.   Dr. Olson and Marvin Klehr subsequently looked inside the
Harvestore and observed large amounts of moldy and spoiled feed.     This was
the first time that Marvin Klehr had looked inside the Harvestore unit when
feed was still being stored in the unit.

       The Klehrs later commenced this action on August 27, 1993, alleging
Minnesota common law fraud and negligent representation claims, violations
of certain Minnesota consumer statutes, and violations of RICO.        AOSHPI
moved for summary judgment on each claim arguing, inter alia, that the
claims were barred by the statute of limitations.          The district court
granted AOSHPI's motions.   Klehr, 875 F. Supp. at 1345.    The Klehrs appeal.

                                    -5-
                                    II.

     We review de novo the district court's grant of summary judgment.
Maitland v. University of Minn., 43 F.3d 357, 360 (8th Cir. 1994).   Summary
judgment is appropriate if the record, when viewed in the light most
favorable to the nonmoving party, reveals that there is no genuine issue
of material fact and that the moving party is entitled to judgment as a
matter of law.   Fed. R. Civ. P. 56(c).

                                     A.

     We turn our attention first to the Klehrs' Minnesota common law fraud
claims, which are governed by a six-year statute of limitations.   See Minn.
Stat. Ann. § 541.05(6) (West 1988).6      Under this statute, the cause of
action accrues, thereby triggering the limitations period, upon "the
discovery by the aggrieved party of the facts constituting the fraud." Id.

     The Minnesota Supreme Court has construed this statute as imposing
a standard of objective reasonableness upon a plaintiff to discover the
facts constituting the fraud.   Bustad v. Bustad, 116 N.W.2d 552, 555 (Minn.
1962).   "[T]he facts constituting the fraud are deemed to have been
discovered when, with reasonable diligence, they could and ought to have
been discovered."    Blegen v. Monarch Life Ins. Co., 365 N.W.2d 356, 357
(Minn. Ct. App. 1985)    (quotations omitted).   "A plaintiff must exercise
reasonable diligence when he or she has notice of a possible cause of
action for fraud."      Buller v. A.O. Smith Harvestore Prods., Inc., 518
N.W.2d 537, 542 (Minn. 1994).   A "`party need not know the details of the
evidence establishing a cause of action, only that the cause

     6
      With respect to these claims, we review de novo the
district court's interpretation of Minnesota law. Michalski v.
Bank of America Arizona, 66 F.3d 993, 995 (8th Cir. 1995).

                                    -6-
of action exists'" in order for the limitations period to commence.    Id.
(quoting Hydra-Mac, Inc. v. Onan Corp.,        450 N.W.2d 913, 919 (Minn.
1990)).    A failure to actually discover the fraud will not toll the
limitations period if such a failure is inconsistent with this reasonable
diligence standard.   Blegen, 365 N.W.2d at 357.

     The Klehrs bear the burden of showing that they did not, and that
with reasonable diligence they could not, discover the facts constituting
the fraud earlier than August 27, 1987, six years prior to the time this
action was filed.     Id.   A plaintiff's due diligence in the statute of
limitations context is ordinarily a question of fact.   Hines v. A.O. Smith
Harvestore Prods. Inc., 880 F.2d 995, 999 (8th Cir. 1989).       Where the
evidence leaves no room for reasonable minds to differ on the issue,
however, the court may properly resolve the issue as a matter of law.
Miles v. A.O. Smith Harvestore Prods., Inc., 992 F.2d 813, 817 (8th Cir.
1993).

     The   Klehrs argue that they did not become aware of the facts
constituting the fraud until April of 1991, when Marvin Klehr, accompanied
by Dr. Olson, looked inside the silo for the first time during feed storage
and observed large amounts of mold in the feed.    The Klehrs submit that
they questioned Deutsch about the presence of mold and spoilage in the feed
and that at various times they consulted numerous veterinarians and
nutritionists concerning the health and reproductive problems that their
dairy herd was experiencing.    Based on these actions, the Klehrs assert
that a fact question exists concerning whether they exercised reasonable
diligence to determine the facts constituting the fraud.    We disagree.

     Shortly after they began using the Harvestore unit to store haylage,
the Klehrs encountered problems that were directly contrary to AOSHPI's
representations concerning the benefits a Harvestore unit would provide.
AOSHPI represented to the Klehrs

                                    -7-
that using a Harvestore to store feed for their dairy herd would virtually
eliminate problems with moldy and spoiled feed.   However, beginning in July
of 1976 and continuing each subsequent year, Marvin Klehr observed mold in
the feed which had been extracted from the unit; further, beginning in the
spring of 1978, Marvin Klehr annually emptied one to two manure spreader
loads of moldy or spoiled feed from the unit.         Further, contrary to
AOSHPI's representations of improved herd health, herd health actually
deteriorated.   The herd also began experiencing heretofore unencountered
breeding and reproductive problems.    The Klehrs consulted with a number of
nutritionists and veterinarians over the years, but they never asked any
of these consultants whether the feed fed from the Harvestore silo could
have been the source of the herd's health and reproductive problems.

     Similarly, it was represented to the Klehrs that one of the chief
virtues of a Harvestore was that it would dramatically improve the quality
of the feed such that protein supplements would become unnecessary; the
Klehrs, however, were never able to reduce or eliminate protein supplements
to the herd's daily feed ration.   In addition, promises of increased milk
production and profitability of the dairy operation went unfulfilled; in
fact, while the Klehrs' dairy operation had been profitable prior to the
purchase of the Harvestore, thereafter the Klehrs experienced financial
hardship because the dairy profits were not large enough.        The Klehrs
failed to examine records in their possession which would have indicated
to them that the Harvestore unit was not delivering the promised increases
in milk production and profitability, and that the herd's milk production
was subpar compared to other local dairy herds.         The Klehrs did not
question Deutsch or AOSHPI officials until 1990, some 16 years after
putting the Harvestore to use, about the lack of an increase in milk
production and profitability of the dairy operation, and the

                                      -8-
inability to eliminate protein supplements from the herd's daily feed
ration.

      The Klehrs assert that health or reproductive problems in a dairy
farming operation can be caused by a myriad of factors inherent in dairy
farming and therefore determining the precise source of the problem is
impossible.    Setting aside the other promised benefits concerning the
Harvestore which never came to pass (moldy and spoiled feed, inability to
eliminate protein supplements), in this case the Klehrs' herd suffered
numerous health and reproductive problems shortly after the Klehrs started
to feed the herd haylage stored in the Harvestore unit.         After encountering
these problems, the Klehrs were on notice of a possible cause of action for
fraud and were required to conduct a reasonably diligent investigation --
perhaps by inspecting the silo during feed storage (which they did for the
first time in 1991 and observed the prevalence of mold), by questioning
Deutsch or AOSHPI representatives concerning why the dairy operation was
not profitable, or by asking a veterinarian or nutritionist whether the
Harvestore could be the source of the problems.          Their failure to do so is
simply inconsistent with Minnesota's inquiry notice standard, under which
plaintiffs are required to exercise reasonable diligence to discover the
facts which may constitute the fraud.        We hold that, as a matter of law,
the Klehrs, by exercising reasonable diligence, should have discovered the
facts constituting the alleged fraud prior to August 27, 1987.

      This case is distinguishable from our holding in Hines, where we were
called upon to decide whether the Missouri statute of limitations barred
the   plaintiffs'   common   law   fraud   claims   in   connection   with   several
Harvestore silos. 880 F.2d at 995.       We held in Hines that a factual
dispute existed concerning when the plaintiffs' cause of action accrued
under Missouri law because there was a conflict in the evidence concerning
when the plaintiffs

                                       -9-
should have known that the Harvestore silos were not operating as AOSHPI
represented.     Id. at 998.   Notwithstanding Hines, our analysis in this
case, which concerns Minnesota state law claims, is governed by the
teachings of the Minnesota Supreme Court concerning the interpretation and
application of that state's discovery accrual rule; of particular import
is that court's recent decision in Buller, which, like this case, involved
the application of the statute of limitations involving a claim of fraud
in connection with a Harvestore silo.   Our analysis is also guided by the
Minnesota federal district court's holding in Veldhuizen, wherein that
court addressed the precise issues in front of us in another case involving
a Harvestore silo.   The analysis expounded in these cases makes clear that
the Klehrs' cause of action accrued long before August 27, 1987.   Thus, our
Hines decision, in which we were called upon to interpret Missouri's
discovery rule, is not controlling here.

     In any event, to the extent that Hines applies, there we relied upon
evidence that water had leaked into the Harvestore due to cracks in the
structure and had possibly come into contact with the feed stored within;
thus, the plaintiffs would have been unable to determine whether the silo,
if it had been properly sealed, nevertheless could not live up to AOSHPI's
representations that moldy and spoiled feed would be eliminated.        The
Klehrs, however, have made no similar showing that their silo had cracks
that may have permitted water to come into contact with the stored feed,
and which would create a question of fact as to the cause of the moldy or
spoiled feed.7

     7
      Both parties cite a number of cases from other
jurisdictions dealing with the Harvestore litigation. See, e.g.,
Horn v. A.O. Smith Corp., 50 F.3d 1365 (7th Cir. 1995); Mohr v.
A.O. Smith, et al., 1994 WL 178111 (E.D. Mich.); Nelson v. A.O.
Smith Harvestore Prod., Inc., No. 86-4230-R (D. Kan. 1990);
Johnston v. AgriStor Credit Corp., Civ. No. 84-4421-S (D. Kan.
1987).   While we find the analysis of these courts to be
somewhat helpful, again our
analysis is governed by the Minnesota Supreme Court's
interpretation of Minnesota's discovery accrual rule applicable
to fraud claims.

                                    -10-
     The Klehrs also contend that the statute of limitations did not
commence until they were aware that the Harvestore unit had a design defect
that prevented it from performing as represented.         Such a standard,
however, is wholly inconsistent with the Minnesota Supreme Court's teaching
that the requirement of reasonable diligence imposes an affirmative duty
to investigate upon a party who is aware of facts that might constitute a
possible cause of action for fraud.    Buller, 518 N.W.2d at 542; Hydra-Mac,
450 N.W.2d at 919 ("A party need not know the details of the evidence
establishing the cause of action, only that the cause of action exists.").
We find persuasive the following statement from Veldhuizen, where the court
addressed this precise issue: "The limitations period does not wait to run
until the [plaintiffs] were able to make a causal connection between the
failure of the silo to perform as promised and a particular design defect."
Veldhuizen v. A.O. Smith Corp., 839 F. Supp. 669, 676 (D. Minn. 1993).
Thus, we reject the Klehrs' argument that the limitations period did not
commence until they were able to pinpoint the design flaw that prevented
the Harvestore from performing as represented.8

     8
      Likewise, we reject as meritless the Klehrs' assertion that
their "failure to realize non-actionable predictions of future
performance" did not trigger the statute of limitations.
(Klehrs' brief at 21.) The problems the Klehrs actually
experienced shortly after they started using the Harvestore
should have put them on notice that AOSHPI's representations
concerning the unit were false, regardless of whether other
performance benefits would have been independently actionable.
While the Klehrs may not have been required to immediately file
suit when they realized the representations were not true, they
were required to conduct a reasonable further investigation,
which, as we have outlined in detail, they failed to do.

                                      -11-
                                          B.

      The Klehrs contend that AOSHPI fraudulently concealed their fraud
cause of action and therefore the statute of limitations should be tolled.
"Fraudulent concealment `tolls the statute of limitations until the party
discovers, or has a reasonable opportunity to discover, the concealed
defect.'"    Buller, 518 N.W.2d at 542 (quoting Hydra-Mac, Inc., 450 N.W.2d
at 918).     The limitations period is tolled, however, "only if it is the
very existence of the facts which establish the cause of action which are
fraudulently concealed."      Hydra-Mac, Inc., 450 N.W.2d at 918-19.       "Merely
establishing that a defendant had intentionally concealed the alleged
defects is insufficient; the claimant must establish that it was actually
unaware that the defect existed before a finding of fraudulent concealment
can be sustained."          Id.    Further, "`there must be something of an
affirmative nature designed to prevent, and which does prevent, discovery
of the cause of action'" for fraudulent concealment to apply.              Wild v.
Rarig, 234 N.W.2d 775, 795 (Minn. 1975) (quoting 54 C.J.S. Limitations of
Actions § 206f).       The Klehrs bear the burden of showing that AOSHPI
concealed the fraud and that the concealment itself could not have been
discovered sooner by exercising reasonable diligence.         Buller, 518 N.W.2d
at 542-43.

      The Klehrs contend that material fact issues remain concerning
whether     AOSHPI   knew   that   the   Harvestore   silos   were   defective   and
deliberately concealed the defects from them through oral representations,
written materials sent to Harvestore owners, and promotional meetings which
the Klehrs attended.        The Klehrs also contend that suggestions made by
Deutsch and representatives of AOSHPI concerning methods to improve the
dairy operation served to conceal the defects from them.         According to the
Klehrs, these misrepresentations prevented them from discovering the fraud,
and

                                         -12-
accordingly the statute of limitations should be tolled during the period
these continuing misrepresentations were made.

      These arguments are unpersuasive quite simply because the Klehrs have
made no showing that AOSHPI affirmatively concealed from them the existence
of facts which would have supported their cause of action for fraud.     As
chronicled in detail above, the Klehrs were aware as early as 1976, when
Marvin Klehr saw mold in feed taken from the Harvestore, that the silo was
not performing as promised.     The oral and written representations the
Klehrs rely on to support their fraudulent concealment argument did not,
and indeed could not, prevent them from discovering that AOSHPI's promises
concerning the virtues of a Harvestore unit did not come to pass.      See
Miles, 992 F.2d at 816 (rejecting claim of fraudulent concealment in
connection with Harvestore because of impossibility for defendants to
conceal facts giving rise to cause of action when the evidence was in the
plaintiff's own yard); Veldhuizen, 839 F. Supp. at 675 ("providing the
[plaintiffs] with the post-sale materials does not rise to the level of
affirmative concealment necessary to toll the statute of limitations.").
Id.   See also Buller, 518 N.W.2d at 543 (rejecting fraudulent concealment
claim based on post-sale advertising materials because plaintiff knew that
Harvestore was not performing as represented).   In short, the Klehrs' lack
of diligence precludes us from tolling the statute of limitations due to
fraudulent concealment.9

      9
      We likewise reject the Klehrs' claims that, in the
alternative, AOSHPI is equitably estopped from asserting the
statute of limitations because of the repairs that were made to
the Harvestore silo in approximately 1982. There is no evidence
that AOSHPI represented that these repairs would cure the myriad
of problems outlined above that the Klehrs had been experiencing.
In any event, the Klehrs admit that after the repairs were made
the same problems which they previously experienced continued.
Thus, equitable estoppel is inapplicable in this case.

                                   -13-
                                        III.

     The Klehrs argue that the district court erred by holding that their
civil RICO claims were barred by the statute of limitations.              Civil RICO
claims are governed by a four-year statute of limitations.          Association of
Commonwealth Claimants v. Moylan, 71 F.3d 1398, 1402 (8th Cir. 1995).           This
circuit employs a discovery accrual standard to civil RICO claims; under
this standard, such an action begins to accrue "as soon as the plaintiff
discovers, or reasonably should have discovered, both the existence and
source of his injury and that the injury is part of a pattern."           Id. (inner
                  10
quotes omitted)        The date when the injury and the pattern should have
been discovered is subject to a standard of reasonableness, id., not unlike
the standard for fraud claims outlined above.           Thus, it is incumbent upon
the Klehrs to show that it would not have been reasonable to discover the
existence, source, and pattern of their injury by August 27, 1989.

     The   Klehrs'     RICO   claims   are   premised    on   allegedly   fraudulent
advertising and promotional materials that they received through the mail
from AOSHPI on a continuous basis before and after they purchased the
Harvestore.   The Klehrs claim that AOSHPI distributed similar materials to
individuals throughout the United States during this period.          They contend
that these materials made the same fraudulent misrepresentations concerning
the attributes and the benefits of Harvestore silos that they relied on in
deciding to purchase their unit.

     10
      The Klehrs assert a claim under 18 U.S.C. § 1962(a) for
injury resulting from the reinvestment of income from the RICO
enterprise in addition to their claim under 18 U.S.C. § 1962(c)
based on a pattern of racketeering activity. The Klehrs contend
that both claims are governed by the same discovery accrual rule,
and we will assume, without deciding, that the same accrual rule
applies to both causes of action.

                                       -14-
       However, we agree with the district court that the facts which should
have put the Klehrs on notice of a possible cause of action for fraud
should also have alerted them to the existence, source, and pattern of the
injury for their RICO claim.      As noted above, the Klehrs knew or should
have   known   shortly   after   purchasing   the   Harvestore    that   AOSHPI's
representations concerning the silo's attributes were simply not coming
true and thus should have recognized the existence and source of their
injury.    Likewise, given that the Klehrs received numerous promotional
materials and advertisements in the mail before and after they purchased
the silo, they should have known that the misrepresentations were part of
a pattern of suspected racketeering activity.       We believe that the Klehrs
should have determined that the representations were part of a pattern of
racketeering activity when they should have identified the Harvestore as
the cause and source of their problems.       See Agristor v. Financial Corp.
v. Van Sickle, 967 F.2d 233, 241-42 (6th Cir. 1992) (stating in analogous
case that "as a matter of law, [the plaintiff] should have determined that
the representations were part of a pattern at the same time it should have
discovered that the silos caused the alleged problems on the dairy farm.").

       The Klehrs urge us to adopt "a separate accrual rule," which would
permit them to recover damages for predicate acts that occur within the
limitations period, even if their claim for similar damages caused by
similar predicate acts outside of the four-year period are time-barred.
In essence, then, the Klehrs request that we adopt the "last predicate act"
accrual rule outlined by the Third Circuit in Keystone v. Houghton, 863
F.2d 1125, 1126 (3d Cir. 1988), or a variation thereof.              However, in
Granite Falls Bank v. Henrikson, 924 F.2d 150, 154 (8th Cir. 1991), we
declined to adopt such an "open-ended" standard, observing that it was
inconsistent with "the underlying policy of a statute of limitations
requiring due diligence on the part of the plaintiff." 924 F.2d at 154.

                                     -15-
Instead, we adopted an approach under which a plaintiff has four years to
bring his claim from the point in time that he knew, or in exercising
reasonable diligence should have known, of the existence and source of his
injury and that the injury was part of a pattern, or his RICO claims are
forever barred.    Id.     The principles expounded in Granite Falls preclude
us from adopting the standard that the Klehrs propose.

      We likewise reject the Klehrs' related assertion that their RICO
claims are revived because of the "continuing damage" they sustained into
the limitations period through the continued use, operation, and repair of
the   Harvestore   silo.      Again,   Granite   Falls   provides   the   governing
principle: it makes clear that a civil RICO action accrues with respect to
"each independent injury" to the plaintiff. 924 F.2d at 154.       The Klehrs
would have us hold that each advertisement or promotional material that was
sent to them or that they observed constitutes a separate "injury."
However, these injuries are not "independent injuries" because they are all
of the same type, flow from the same source, and are part of one cognizable
pattern of conduct -- AOSHPI's alleged misrepresentations regarding the
Harvestore unit.   We believe that these separate, discrete "injuries" that
the Klehrs identify are more appropriately categorized as one single,
continuous injury that was sustained sometime in the 1970s and for which
the limitations period commenced long before August 27, 1989.         See Glessner
v. Kenny, 952 F.2d 702, 708 (3d Cir. 1992) ("the mere continuation of
damages into a later period will not serve to extend the statute of
limitations.").    Thus, the Klehrs' civil RICO claims are time-barred.11

      11
      We reject the Klehrs' argument that federal equitable
tolling principles save their claim from being barred by the
statute of limitations. The Klehrs' failure to act with due
diligence precludes the application of this doctrine. See
Johnson v. United States Postal Service, 861 F.2d 1475, 1481
(10th Cir. 1988), cert. denied, 493 U.S. 811 (1989). See also
Wilson v. United States
Government, 23 F.3d 559, 561 (1st Cir. 1994) ("[f]ederal courts
have allowed equitable tolling only sparingly.").

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                                        IV.

        We have examined the Klehrs' numerous other arguments and determine
that they lack merit for the reasons given by the experienced district
judge    in   his   well-reasoned   opinion.   Accordingly,   for   the   reasons
enumerated above, we affirm the district court's grant of summary judgment
to AOSHPI.

        A true copy.

              Attest:

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

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