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Narum v. Faxx Foods Inc.3/18/1999
d, the "plaintiff must show that she relied on the representations or acts of defendant and, as a result of that reliance, she failed to commence the action within the prescribed period.". . . Lastly, "the plaintiff must show that the acts of defendant giving rise to the assertion of estoppel must have occurred before the expiration of the limitation period." Burr v. Trinity Medical Center, 492 N.W.2d 904, 908 (N.D. 1992) (internal citations and footnote omitted). A plaintiff's reliance on the defendant's conduct must be reasonable, and there must be some form of affirmative deception on the part of the defendant. Matter of Helling, 510 N.W.2d 595, 597 (N.D. 1994).
[ ] Relying on the fiduciary duty officers and directors of a corporation owe to its shareholders, see Production Credit Ass'n of Fargo v. Ista, 451 N.W.2d 118, 121 (N.D. 1990), the plaintiffs assert less than one year elapsed from the date Faxx first informed them of the security law violations and the date Faxx brought the federal lawsuit against Dakco and Saunders, which was not finally resolved until the Eighth Circuit Court of Appeals affirmed the dismissal 438 days later on June 16, 1995. They argue this suit was promptly filed 46 days after learning the appeal was lost and Faxx would not have the funds to repay them. The plaintiffs argue Faxx's first offer to rescind on August 20, 1993, was not made in good faith, and all actions taken afterward were designed to deceitfully lull them into a false sense of security that they would be repaid and they would have no need to sue. We agree with the trial court there is no evidence to support the plaintiffs' estoppel argument.
[ ] The undisputed evidence shows both rescission offers were withdrawn more than one year before the plaintiffs brought this action. When the second rescission offer was withdrawn in February 1994, Faxx's attorney specifically advised the plaintiffs to consult with other attorneys to protect their legal rights. Although Faxx informed the plaintiffs of its federal lawsuit against Dakco and Saunders, we do not believe this action, alone, is sufficient to invoke the doctrine of equitable estoppel. See, e.g., Anisfeld v. Cantor Fitzgerald & Co., Inc., 631 F.Supp. 1461, 1466 (S.D.N.Y. 1986). Reliance solely on knowledge of a lawsuit against third parties is not reasonable because a successful outcome is never a certainty. Here, the information conveyed to investors about the Faxx lawsuit was not false or misleading in any way, and there is no allegation Faxx told the plaintiffs to delay bringing suit until that litigation was resolved. In Schmidt, 460 N.W.2d at 130 (internal citation omitted), we said:
" plaintiff may not invoke the doctrine of equitable estoppel against a defendant unless the plaintiff exercises due diligence in commencing the appropriate legal proceeding after the circumstances giving rise to estoppel have ceased to be operational, that is, after plaintiff has notice, actual or constructive, that he must resort to legal recourse and may no longer rely upon agreements, promises, representations to the contrary, or conduct or deceptive practices which may have lulled them into a sense of security."
[ ] We agree with the trial court that, as a matter of law, the plaintiffs had notice of potential Securities Act claims no later than February 1994 when the second rescission offer was withdrawn. The actions by the defendants after that date cannot reasonably be construed as equitably estopping them from relying on the one-year limitation period. The trial court correctly concluded principles of equitable estoppel do not apply in this case.
C.
[ ] The plaintiffs contend the trial court erred in
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