Liddell, et al v. First Fam Fincl Svc, et al

United States Court of Appeals
Fifth Circuit
F I L E D
August 25, 2005
Charles R. Fulbruge III
Clerk
In the
United States Court of Appeals
for the Fifth Circuit
_______________
m 04-61076
Summary Calendar
_______________
TEDRICK D. LIDDELL, ET AL.,
Plaintiffs,
CHERLY STAMPS; MARIE G. STEWART; MAGGIE L. CAMPBELL; ESTOLA CLAY;
CAREY G. COX; PATRICIA A. COX; AUTHORINE WHITE; DWIGHT C. WILKINSON;
JAMES E. WILLIAMS; MAGGIE WILLIAMS; LILLIE WILSON; DIXIE YOUNG;
WILLIE CHANDLER; SUSIE G. EDWARDS; CAROL L. WILLIS; MORRIS D. RUSH;
ELSIE W. RUSH; CATHERINE GIVENS; BESSIE BRIM,
Plaintiffs-Appellants,
VERSUS
FIRST FAMILY FINANCIAL SERVICES, INC., ET AL.,
Defendants,
FIRST FAMILY FINANCIAL SERVICES, INC.;
FIRST FAMILY FINANCIAL SERVICES MANAGEMENT CORPORATION;
ASSOCIATES FINANCIAL SERVICES COMPANY, INC.;
ASSOCIATES INVESTMENT CORPORATION;
ASSOCIATES FIRST CAPITAL CORPORATION;
ASSOCIATES CORPORATION OF NORTH AMERICA; ASSOCIATES CAPITAL BANK;
AMERICAN HEALTH AND LIFE INSURANCE COMPANY;
CITIFINANCIAL RETAIL SERVICES, INC.; CITIFINANCIAL, INC.;
CITIFINANCIAL OF MISSISSIPPI, INC.; COMMERCIAL CREDIT CORPORATION;
ASSOCIATES HOUSING FINANCE LLC,
Defendants-Appellees.

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_________________________
Appeal from the United States District Court
for the Southern District of Mississippi
m 4:02-CV-43
___________________________
Before DAVIS, SMITH, and DENNIS,
Circuit Judges
JERRY E. SMITH, Circuit Judge:
In this appeal, we address whether the dis-
trict court abused its discretion when it grant-
ed defendants’ motion for summary judgment
on a determination that plaintiffs’ claims are
barred by the statute of limitations. Because
to toll limitations for fraudulent concealment
under Mississippi law, there must be evidence
of an affirmative act of concealment after the
initial fraud, the district court appropriately
dismissed plaintiffs’ claims for fraud in the sale
of insurance. We affirm.
I.
The plaintiffs sued to recover damages for
alleged fraudulent misrepresentations and
omissions by the defendants in the sale of con-
sumer credit insurance that accompanied
defendants’ issuance of consumer loans.1 The
most recent of the transactions at issue tran-
spired in May 1998; plaintiffs sued in Febru-
ary 2002, more than three years later. Specifi-
cally, plaintiffs allege that defendants misrep-
resented and concealed numerous material
facts, including “the costs and benefits . . . of
purchasing insurance.”2 Plaintiffs concede that
defendants did not engage in any acts of con-
cealment after the sales transactions took
place.
II.
On appeal, the standard of review for the
entry of summary judgment is de novo.3
Summary judgment is proper only where,
viewed in the light most favorable to the
nonmoving party, the evidence shows that
there is no genuine issue as to any material fact
and that the moving party is entitled to judg-
ment as a matter of law. FED. R. CIV. P.
56(c).4
III.
All parties agree that MISS. CODE § 15-1-
49 is the applicable statute of limitations for
plaintiffs’ claims, establishing a three-year
1 Because the limitations question is dispositive
for all the plaintiffs, we avoid examining distinct
subclasses of the plaintiffs and any separate
grounds for dismissal relied on by the district
court.
2 Plaintiffs make a litany of charges that es-
sentially stem from an alleged comprehensive effort
to defraud customers in the sale of “unnecessary”
and “overpriced” supplemental credit insurance.
3 King v. Provident Life & Acc. Ins. Co., 23
F.3d 926, 928 (5th Cir. 1994).
4 Am. States Ins. Co. v. Natchez Steam Laun-
dry, 131 F.3d 551, 553 (5th Cir. 1998).

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limitations period for fraud claims.5 Under
Mississippi law, each of plaintiffs’ claims ac-
crued on the completion date of the loan trans-
actions.6 Therefore, it is evident that plaintiffs
have failed to bring their claims within the
three-year statutorily defined period.
Plaintiffs contend, however, that defen-
dants’ fraudulent concealment tolls the running
of the limitations period. Section 15-1-67 of
the Mississippi Code states that “[i]f a person
liable to any personal action shall fraudulently
conceal the cause of action from the knowl-
edge of the person entitled thereto, the cause
of action shall be deemed to have first accrued
at, and not before, the time at which such
fraud shall be, or with reasonable diligence
might have been, first known or discovered.”
Consequently, to establish fraudulent conceal-
ment, plaintiffs must demonstrate (1) that
defendants acted affirmatively to conceal the
fraud; and (2) that plaintiffs could not have
discovered the alleged fraud with the exercise
of due diligence.7
Although plaintiffs concede that they bear
the burden of demonstrating defendants’ af-
firmative acts of concealment, they contend
that such affirmative acts need not occur after
the time of the alleged fraud. Rather, plaintiffs
assert that the defendants’ “pattern of con-
duct” at the time of the insurance sale was
“self-concealing.”8 The statute, speaking only
of concealment, is seemingly ambiguous as to
whether the affirmative acts need occur after
the initial fraud or whether, to the contrary,
acts of concealment at the time of the sale, like
those alleged by plaintiffs, can also toll the
statute of limitations.
The plaintiffs argue that because the fraud
here is of a “self-concealing” nature, they need
only show evidence of the fraud itself to es-
tablish the first element of fraudulent conceal-
ment.9 Therefore, plaintiffs’ assertions of af-
firmative acts at the time of the sale would be
sufficient to establish this first required ele-
ment. Plaintiffs’ reliance on Texas precedent
is at best only persuasive, however, and not
binding on our explication of Mississippi law.
Plaintiffs correctly note that at least one
court has recognized that the affirmative-act
question remains unresolved in Mississippi.10
5 The statute provides a limitations period for
all claims that do not have a separately specified
limitations period.
6 Stephens v. Equitable Life Assurance Soc’y,
850 So. 2d 78, 82 (Miss. 2003) (stating that fraud
claims “accrue[] upon the completion of the sale
induced by such false representation or upon the
consummation of the fraud”).
7 Id. at 83. (“[P]laintiffs have a two-fold obli-
gation to demonstrate that (1) some affirmative act
or conduct was done and prevented discovery of a
claim, and (2) due diligence was performed on their
part to discover it.”)
8 Though it remains uncertain whether the dis-
trict court properly concluded that plaintiffs have
not alleged any affirmative acts of concealment, it
is unnecessary to examine the question, because
plaintiffs concede that they have alleged no such
acts that occurred after the transactions at issue.
9 Plaintiffs base their argument on Texas v.
Allan Constr. Co., 851 F.2d 1526 (5th Cir. 1988),
in which we interpreted the doctrine of fraudulent
concealment under Texas law as a means to toll the
limitations period of the Sherman Anti-Trust Act.
10 Phillips v New England Mut. Life Ins. Co.,
36 F. Supp. 2d 345 (S.D. Miss. 1998) (“The Mis-
sissippi Supreme Court has not yet decided wheth-
(continued...)

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Though plaintiffs cite another district court
case for support of a lesser point,11 and that
opinion does acknowledge that in 2002, the
question on the timing of affirmative acts re-
mained unresolved under Mississippi author-
ity,12 the opinion plaintiffs cite was vacated a
few months later by the same district judge.13
Therefore, the plaintiffs’ entire argument
must stand on this assumption that the timing
of the affirmative-act requirement is still un-
decided in Mississippi and that, therefore, per-
suasive precedent from Texas should control
here. We reject plaintiffs’ invitation to apply
Texas law, because in Ross v. CitiFinancial,
Inc., 344 F.3d 458, 464 (5th Cir. 2003), we
held that Mississippi law is in fact well settled
with respect to this issue, stating that “Missis-
sippi law is unambiguous: Plaintiffs must
prove a subsequent affirmative act of fraudu-
lent concealment to toll the limitations.”
We adhere to the rule of stare decisis in in-
terpreting state law.14 Absent a Mississippi
Supreme Court decision or statutory amend-
ment, the caselaw of this court interpreting
§ 15-1-67 binds this panel.15 Because neither
the Mississippi legislature nor the Mississippi
Supreme Court has spoken on this issue, we
are bound by Ross.
In Ross, we faced a case similar to that pre-
sented here. Plaintiffs alleged fraudulent mis-
representations and omissions in the sale of
supplemental credit insurance products during
plaintiffs’ loan application processes.16 Ap-
plying Mississippi law, we held that “[p]ursu-
ant to § 15-1-67, [p]laintiffs were required to
prove an affirmative act of fraudulent conceal-
ment post-completion of the insurance sales in
order to toll the statute of limitations.”17
In spite of the district court’s proper reli-
10(...continued)
er subsequent affirmative acts of concealment are
required to toll the statute of limitations for fraud
when the underlying action itself is based on
fraud.”).
11 Rainwater v. Lamar Life Ins. Co., 207 F.
Supp. 2d 561 (S.D. Miss. 2002) (remanding based
on the fact that there was a possibility that underly-
ing claim had been tolled by fraudulent conceal-
ment.), vacated, 246 F. Supp. 2d 546 (S.D. Miss.
2003), appeal dism’d, 391 F.3d 636 (5th Cir.
2004). Plaintiffs cite this case to support their ar-
gument that fraudulent concealment is “widely ac-
cepted by Mississippi Courts.”
12 Id. at 566-68. (2002) (granting plaintiffs’
motion to remand to state court because court
could not find that there was “no possibility” of
plaintiffs recovery when under state law when the
requirement of subsequent affirmative acts re-
mained unresolved in Mississippi courts.)
13 See Rainwater v. Lamar Life Ins. Co., 246 F.
Supp. 2d 546 (S.D. Miss. 2003), appeal dism’d,
391 F.3d 636 (5th Cir. 2004).
14 See Broussard v. S. Pac. Transp. Co., 665
F.2d 1387, 1389 (5th Cir. 1982) (en banc).
15 Ford v. Cimarron Ins. Co., 230 F.3d 828,
832 (5th Cir. 2000) (“Therefore, a prior panel’s
interpretation of state law has binding precedential
effect on other panels of this court absent a subse-
quent state court decision or amendment rendering
our prior decision clearly wrong.”).
16 Ross, 344 F.3d at 460. Specifically, “Plain-
tiffs alleged: their insurance premiums were ex-
cessive compared to market rates; they were in-
flated by commissions; and their loan interest and
principal were increased by including the insurance
polices within the loan amounts or unnecessarily
refinancing the loans.” Id.
17 Id at 464.

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ance on Ross for deciding this question, plain-
tiffs remain convinced that Allan Construc-
tion should control.18 That assertion is further
undermined by the fact that Ross is not unique
in holding that § 15-1-67 requires subsequent
affirmative acts of concealment. In Rainwater
v. Lamar Life Ins. Co., 391 F.3d 636, 637 (5th
Cir. 2004) (per curiam), which is the appeal in
a district court proceeding the plaintiffs cite in
support of their position,19 we remarked that
“[o]ur decision in Ross resolved any remaining
doubts that the district court may have had
about a substantial ground for a difference of
opinion on the doctrine of fraudulent conceal-
ment.” More importantly, the Mississippi Su-
preme Court recently indicated its agreement
by holding that “there must be some subse-
quent affirmative act by the defendant which
was designed to prevent and which did prevent
discovery of the claim.” Andrus v. Ellis, 887
So. 2d 175, 181 (Miss. 2004) (citing Stephens,
850 So. 2d at 83-84).
Plaintiffs, in relying on Texas precedent,
have not alleged any subsequent acts of con-
cealment against any defendant. Therefore,
pursuant to § 15-1-67 and Ross and Andrus,
they have failed to establish fraudulent con-
cealment. Consequently, the three-year limi-
tations period set forth in § 15-1-49 is not
tolled. Because plaintiffs’ claims are untimely,
the district court correctly granted summary
judgment in favor of the defendants.20
AFFIRMED.
18 Disregarding the district court’s reliance on
Ross in determining the applicable construction of
§ 15-1-67, plaintiffs’ brief on appeal lacks even a
single mention of Ross. Though plaintiffs’ brief
challenges Stephens by stating that “Stephens does
not change the law whatsoever from the holding of
Allan” because fraudulent concealment was never
presented in Stephens, such argument misses the
point that Ross firmly established the requirement
of an affirmative act of concealment subsequent to
the sale.
19 See supra notes 11-13 and accompanying
text.
20 Because plaintiffs have failed to plead sub-
sequent affirmative acts of concealment as required
by § 15-1-67, it is unnecessary to determine
whether, regarding the requirement of diligence as
a matter of law, they could have discovered the
fraud before limitations had run.

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