Kdc Foods , Inc. v. Gray, Plant , Mooty, Mooty & Bennett, P.a.

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 13‐3678
KDC FOODS , INC.,
Plaintiff‐Appellant,
v.
G RAY, P LANT , MOOTY, MOOTY & BENNETT, P.A., et al.,
Defendants‐Appellees.
____________________
Appeal from the United States District Court for the
Western District of Wisconsin.
No. 3:12‐cv‐00636‐bbc — Barbara B. Crabb, Judge.
____________________
A RGUED A PRIL 1, 2014 — D ECIDED A UGUST 15, 2014
____________________
Before T INDER and HAMILTON, Circuit Judges, and
KAPALA , District Judge.*
T INDER , Circuit Judge. This case is brought by the estate of
a bankrupt corporation, KDC Foods, Inc., against former
outside counsel Gray, Plant, Mooty, Mooty & Bennett P.A.
* The Honorable Frederick J. Kapala of the United States District Court
for the Northern District of Illinois, sitting by designation.

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2 No. 13‐3678
(“GPM” or “Gray Plant”) and three current or former GPM
attorneys, Daniel Tenenbaum, Phillip Bohl, and Jennifer Da‐
sari. Plaintiff‐Appellant KDC alleges that the law firm and
its attorneys were complicit in an insider conspiracy to bank‐
rupt the company. The district court granted summary
judgment against KDC on the grounds that its claims were
barred by the statute of limitations. KDC appeals that judg‐
ment to our court.
I
In reviewing a grant of summary judgment, we construe
all facts and draw all reasonable inferences in favor of the
non‐moving party. Phillips v. Cont’l Tire The Americas, LLC,
743 F.3d 475, 477 (7th Cir. 2014). The facts here are thus re‐
counted in the light most favorable to KDC. “We do not
vouch for their truth in any other sense.” Good v. Univ. of Chi.
Med. Ctr., 673 F.3d 670, 673 (7th Cir. 2012).
A. Engagement and Resignation of GPM
Plaintiff‐Appellant KDC Foods, Inc. was founded in 1996
in Eau Claire, Wisconsin to create and sell baking products
and related manufacturing techniques. By 2004, KDC had
developed various shelf‐stable dough products and licensed
its technologies. But despite the royalties it was receiving,
KDC had cash flow problems. On March 1, 2004, KDC hired
Don Johnson as its Chief Financial Officer with the expecta‐
tion that he would raise capital and pursue corporate re‐
structuring opportunities. Soon after his appointment, John‐
son contacted an acquaintance, lawyer and individual De‐
fendant‐Appellee Daniel Tenenbaum, to ask whether
Tenenbaum’s firm, Gray Plant, would represent KDC. The
law firm sent KDC an engagement letter on June 22, 2004,

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No. 13‐3678 3
which included conflict‐waiver language regarding Johnson
and Consolidated Interest Corporation, a company affiliated
with Johnson for which GPM had done prior work. Gray
Plant was ultimately retained by KDC for services relating to
restructuring, intellectual property, and recapitalization mat‐
ters. Unfortunately, KDC’s fortunes did not improve with
Johnson at the helm. On September 14, 2004, Johnson sent
KDC a resignation letter, though he actually left his post on
November 5, 2004. Johnson then joined another corporation,
First Products, Inc., in Minnesota—but more on that later.
KDC’s cash flow problems meant GPM also had difficul‐
ty getting paid, as evidenced by an October 1, 2004 letter
from the firm demanding payment. More than $20,000 in
fees went unpaid, and by letter on November 9, 2004, Gray
Plant resigned as KDC’s counsel, citing the company’s “sig‐
nificant overdue account” with the law firm.
B. KDC’s Bankruptcy and Filing of Initial Lawsuit
Shortly thereafter, in early December 2004, KDC’s board
of directors voted to file for Chapter 11 bankruptcy. KDC’s
assets were sold at auction, and purchased by First Products,
Inc. No other bids were received, and the bankruptcy court
approved the sale after a hearing. After the sale, the bank‐
ruptcy was converted to a Chapter 7 liquidation proceeding.
The bankruptcy trustee, James McNeilly, hired Dennis Sulli‐
van as special counsel for the estate. Sullivan had filed a
shareholder derivative action in November of 2004—just be‐
fore KDC filed for bankruptcy—alleging that Harry Kraklow
and Cynthia Kandler, directors and officers of KDC, had
conspired to defraud the company of its intellectual property
by driving KDC out of business and purchasing its assets at
bargain prices. The derivative action was converted to a di‐

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4 No. 13‐3678
rect action, with Sullivan pursuing the suit on behalf of
KDC. We’ll refer to this proceeding as “the initial lawsuit.”
C. GPM Returns KDC’s Client File
As part of the initial lawsuit, on March 10, 2006, Sullivan
requested that Gray Plant return to him “the complete file
that you have concerning KDC Foods, Inc.” He clarified that
his request “includes, but is not limited to, correspondence,
emails, pleadings, notes, transcripts … .” The file sent to Sul‐
livan by GPM on April 7, 2006 contained emails, memoran‐
da, and time records. In particular, the file contained a de‐
tailed memorandum on corporate records deficiencies pre‐
pared by Defendant‐Appellee Jennifer Dasari. The file also
included time records showing she had worked on the issu‐
ance of 1099 forms and stock certificates. Defendant‐
Appellee Phillip Bohl, a partner at GPM, had noted in his
time sheets that he had emails and discussions with KDC
employee Kim Myers about issuing 1099 forms for other
shareholders, and the file contained records of the transmis‐
sion of stock certificates to reflect the sale of KDC stock to
Johnson, Kandler, and Myers at $0.01 per share. The file also
contained email exchanges between Tenenbaum and John‐
son, in which capitalization, financing, and debt‐reduction
opportunities were discussed. Notably, in a June 7, 2004
email to Tenenbaum prior to GPM’s formal engagement,
Johnson identified four options for the future of KDC, two of
which were to “BK the company” or to “[f]orm as you sug‐
gested a new acquisition company and buy the assets.” The
file also included a memorandum listing ways to “handle”
the shareholders with whom KDC was having trouble, in‐
cluding bringing claims against them for violating the confi‐
dentiality provisions of their contracts.

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No. 13‐3678 5
Sullivan noticed several gaps in the file. About a month
after GPM had sent over the KDC file, he wrote to the firm
that the file included “no emails from Mr. Tenenbaum’s
mailbox or from the mailbox of Jennifer Dasari,” and re‐
quested that GPM recheck its records and produce the corre‐
spondence. On November 26, 2006, eight months after GPM
had sent over its file, Sullivan requested that Gray Plant re‐
examine its files to locate an attachment referenced in an
email. The law firm produced documents after both re‐
quests. Sullivan did not follow up with a request for hand‐
written notes, but those were largely absent from the file as
well: only 4 pages of attorney notes were included. Gray
Plant apparently has a policy to not include any handwritten
attorney notes in client file transfers. (As part of the disclo‐
sures in the present action, Gray Plant produced 77 addi‐
tional pages of attorney notes, as well as 47 pages of addi‐
tional documents, including more emails.)
After the initial file transfer on April 7, 2006, Richard
Wanke, a KDC shareholder, wrote Sullivan an email that
read, in relevant part:
Harry and Gibbs indicated that Gray Plant and
Mooty appraised the stock at $0.01. I believe it
was Tennenbaulm [sic]. Gee, I wonder what
his credentials are? Note also that Phil Bohls
[sic] denied that they appraised the stock. My
gut feeling is that Tennenbalm [sic], Don’s
(Consolidated Interests Corporation CIC) per‐
sonal attorney, said he thought Don could get
away with $0.01 per share based on Don’s
trash talk about the company. Definitely a con‐
flict of interest.

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6 No. 13‐3678
Wanke later testified that he was referring to Johnson’s
conflict of interest with the company, not to any potential
conflict of interest between Tenenbaum and KDC, or GPM
and KDC.
D. Resolution of the Initial Suit
After the initial transfer of KDC’s client file, Sullivan filed
an amended complaint in the initial suit on June 27, 2006,
adding Johnson and First Products, Inc. as defendants, and
adding charges for fraud and conspiracy. The complaint al‐
leged that Johnson and others had conspired to issue addi‐
tional voting shares to seize control of KDC, and steal its as‐
sets and corporate opportunities and redirect them to First
Products, Inc. An element of this conspiracy, the complaint
alleged, was the pressuring of Stanley Popko, a stockholder
“unfriendly” to the conspiracy, to return his KDC stock by
threatening to have the company issue a Form 1099 to Popko
based on a valuation of one dollar per share. This valuation
was much higher than Popko’s basis in the stock, and would
have resulted in significant tax liability to him.
In September 2008, KDC deposed Bohl and Tenenbaum
as part of the initial lawsuit. During their depositions, Bohl
and Tenenbaum testified that in March 2007, Gray Plant had
been engaged by First Products, Inc. in matters unrelated to
the pending suit. The firm had not contacted either company
to obtain a waiver of conflict for this representation. GPM
received more than $80,000 in legal fees for its representation
of First Products, Inc. These payments were pursuant to the
law firm’s typical rates, for services rendered.
In January 2010, a Wisconsin state judge entered judg‐
ment in the initial lawsuit, finding some of the defendants,

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No. 13‐3678 7
including Johnson, had engaged in a civil conspiracy to de‐
fraud KDC and steal its assets.
E. Commencement of Suit against GPM
In July 2011, KDC’s bankruptcy trustee, McNeilly, was
contacted by attorney Michael Erhard, who had been re‐
tained by KDC to review the plausibility of pursuing claims
against Gray Plant. In an email exchange discussing the po‐
tential suit, Erhard wrote that “[a]s it pertains to the applica‐
ble statute of limitations, we calculate that if at all possible
the suit against Gray, Plant, Mooty should be filed by no lat‐
er than the end of August [2011].” Six months later, on
March 26, 2012, Erhard wrote to Gray Plant enclosing a draft
complaint and offering to settle the case for the payment of
$6,000,000. The demand letter noted that “[KDC] only
learned of Gray Plant Mooty’s role in the conspiracy in 2007
[sic—the depositions were in 2008], when Attorneys Tenen‐
baum and Bohl were deposed.” The demand letter did not
lead to settlement, and KDC commenced the present action
on July 31, 2012.
F. Disposition Below
KDC brought seven claims against GPM, alleging that
GPM was involved in the scheme to defraud KDC of its as‐
sets orchestrated by Johnson. KDC eventually abandoned
four of its seven original claims. The three claims the com‐
pany still pursues are for (1) common‐law fraud, (2) conspir‐
acy to commit theft by fraud, and (3) civil conspiracy. In
support of these claims, KDC alleges that GPM falsely repre‐
sented that it would act in KDC’s best interests as its corpo‐
rate counsel, but instead assisted Johnson in driving KDC

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8 No. 13‐3678
out of business so that its assets could be acquired by First
Products, Inc.
During discovery, GPM produced an additional 77 pages
of handwritten notes relating to its representation of KDC. In
addition, when Tenenbaum was deposed in relation to the
present case on May 21, 2013, GPM produced additional
documents, including emails between Johnson and Tenen‐
baum that it had not previously provided to KDC. In one
newly revealed email exchange, which occurred on Novem‐
ber 5, 2004, Tenenbaum told Johnson that GPM was going to
withdraw “for all of the reasons we discussed,” and Johnson
responded that if something were to go wrong with the KDC
dissolution, “it will be hard to come to your firm later.”
On summary judgment, the district court determined
that the three remaining claims were barred by the six‐year
statute of limitations found in Wis. Stat. § 893.93(1)(b), be‐
cause KDC was on notice of GPM’s alleged fraud by April
2006, when Sullivan received KDC’s client file. On appeal,
KDC argues that the documents it received in April 2006
were insufficient to alert it to GPM’s fraud and that it did not
have reason to suspect that fraud until the attorney deposi‐
tions in September 2008, when it learned that GPM had been
engaged by First Products, Inc. and therefore had a motive
to help Johnson with his scheme. KDC further argues that
GPM should be estopped from asserting the statute of limi‐
tations defense because it wrongly withheld information
from KDC that would have led to earlier discovery of the
fraud.

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No. 13‐3678 9
II
In reviewing a grant of summary judgment, we review
legal questions de novo. See Phillips, 743 F.3d at 477. Deter‐
mining which statute of limitations applies to a particular
claim is a question of law, Estate of Hegarty ex rel. Hegarty v.
Beuchaine, 638 N.W.2d 355, 361 (Wis. 2001), so we review de
novo the district court’s determination that the statute of lim‐
itations had run on KDC’s three remaining claims: (1) com‐
mon‐law fraud, (2) conspiracy to commit theft by fraud, and
(3) civil conspiracy.
The parties agree that the fraud and civil conspiracy
claims are governed by the six‐year statute of limitations in
Wis. Stat. § 893.93(1)(b), which applies to any “action for re‐
lief on the ground of fraud.” GPM contends that the claim of
conspiracy to commit theft by fraud should be governed by
the two‐year statute of limitations in Wis. Stat. § 893.57,
which applies to any “action to recover damages for libel,
slander, assault, battery, invasion of privacy, false impris‐
onment or other intentional tort to the person.”1 Theft by
fraud is a crime under Wis. Stat. § 943.20(1)(d). However,
under Wis. Stat. § 895.446(1), a “person who suffers damage
or loss by reason of intentional conduct” prohibited by §
943.20 may bring a civil action for damages. GPM contends
such a claim is based on an intentional tort and should there‐
1 Effective February 26, 2010, the limitations period in § 893.57 was
changed from two to three years. However, the amendment explicitly
stated that it was to apply only to injuries occurring after its effective
date. Because the parties agree that KDC’s injuries occurred prior to Feb‐
ruary 26, 2010, if § 893.57 applies to KDC’s theft‐by‐fraud claim, the limi‐
tations period is two years.

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10 No. 13‐3678
fore be governed by the two‐year statute of limitations in
§ 893.57. The Wisconsin courts have not addressed this issue,
and the district court declined to reach it because it found
that KDC’s claim was untimely even assuming a more for‐
giving six‐year statute of limitations applied. We agree with
the district court that this question is irrelevant if we find
that KDC’s claims are untimely even with a six‐year statute
of limitations. We thus proceed to the main question in this
appeal: when a six‐year statute of limitations would have
begun to run. KDC contends that its claims are not barred by
the statute of limitations for two reasons: first, it claims that
under the discovery rule, its claims did not accrue until the
Bohl and Tenenbaum depositions in 2008, when it first
learned that Gray Plant had been retained by First Products,
Inc. and thus had a financial incentive to assist in the con‐
spiracy. Second, it argues that the doctrine of equitable es‐
toppel bars defendants from asserting the statute of limita‐
tions defense. We consider these arguments in turn.
A. Discovery Rule
KDC filed the present action on July 31, 2012; its suit
would be barred by a six‐year statute of limitations if its
fraud‐based claims accrued before July 31, 2006. While for
some types of injuries a claim accrues at the time of injury,
the so‐called discovery rule tolls the statute of limitations by
requiring that a claim accrue when a plaintiff “discovers”
the injury. In Wisconsin, the discovery rule for claims based
on fraud is created by statute. Wis. Stat. § 893.93(1)(b) pro‐
vides that claims based on fraud do not accrue “until the
discovery, by the aggrieved party, of the facts constituting
the fraud.” This statutory provision “codifies the discovery
rule,” which is judicially explained as follows:

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No. 13‐3678 11
Actual and complete knowledge of the fraud
on the part of the plaintiff is not necessary in
order to set the limitation period running.
When the information brought home to the ag‐
grieved party is such as to indicate where the
facts constituting the fraud can be effectually
discovered upon diligent inquiry, it is the duty
of such party to make the inquiry, and if he
fails to do so within a reasonable time he is,
nevertheless, chargeable with notice of all facts
to which such inquiry might have led. …
[I]t is not necessary that a defrauded party
have knowledge of the ultimate fact of fraud.
What is required is that it be in possession of
such essential facts as will, if diligently investi‐
gated, disclose the fraud. The burden of dili‐
gent inquiry is upon the defrauded party as
soon as he has such information as indicates
where the facts constituting the fraud can be
discovered.
John Doe 1 v. Archdiocese of Milwaukee, 734 N.W.2d 827, 843
(Wis. 2007) (quoting Koehler v. Haechler, 133 N.W.2d 730, 731–
32 (Wis. 1965), to explain the discovery rule as codified in
§ 893.93(1)(b)).
“Discovery occurs when the plaintiff has information
that would constitute the basis for an objective belief as to
his or her injury and its cause.” Schmidt v. N. States Power
Co., 742 N.W.2d 294, 304 (Wis. 2007). As soon as the de‐
frauded party has “sufficient knowledge to make a reasona‐
ble person aware of the need for diligent investigation,” the

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12 No. 13‐3678
clock begins to run. Stockman v. LaCroix, 790 F.2d 584, 588
(7th Cir. 1986) (quoting Gygi v. Guest, 344 N.W.2d 214, 215
(Wis. App. 1984)) (internal quotation marks omitted). This,
as we will see, is the critical point of law on which the case
turns: regardless of how Sullivan and KDC decided to struc‐
ture their investigation into the alleged conspiracy, the stat‐
ute of limitations began to run as soon as KDC had in its
possession knowledge that would cause a reasonable person to
think that a diligent investigation into Gray Plant was neces‐
sary. If KDC had in its possession knowledge that would
have caused a reasonable person to undertake a deeper in‐
quiry, but it chose not to act upon that information, that in‐
action does not push back the time of discovery: a plaintiff’s
“decision not to pursue a legal avenue that might have pro‐
duced useful information is not evidence of reasonable dili‐
gence.” Dakin v. Marciniak, 695 N.W.2d 867, 874 (Wis. App.
2005).
To be sure, the degree of certainty that constitutes suffi‐
cient knowledge is variable, depending on the particular
facts and circumstances of the plaintiff. See Goff v. Seldera,
550 N.W.2d 144, 149 (Wis. App. 1996). “[I]n an appropriate
case, an initial suspicion may trigger the discovery or the ob‐
ligation to exercise reasonable diligence to discover the inju‐
ry. However, in another case, a greater degree of certainty
may be required. The point is that every case must be judged
on its own facts from the standpoint of the reasonable per‐
son.” Id. In Goff, for example, the plaintiff was a patient who
sued a doctor for medical malpractice. The injury in question
was an unnecessary hysterectomy for ovarian cancer that
did not exist; the defendant was the doctor who performed
the surgery and treated the plaintiff’s “cancer” for many
years. The discovery rule in this case was complicated by the

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No. 13‐3678 13
question of when a lay patient can be expected to discover
that contrary to her physician’s representations, she does not
actually have cancer. Likewise, in the context of a parishion‐
er suing a diocese after being sexually molested by a priest,
the Wisconsin Supreme Court reasoned that “it does not fol‐
low from the fact of being sexually molested that any plain‐
tiff would suspect that the Archdiocese knew that the priests
had prior histories of sexual molestation of children and yet
placed them in the position where they would molest more
children.” Doe, 734 N.W.2d at 844. As Doe observes, it is par‐
ticularly necessary for the discovery rule to be flexible in de‐
partures from the “business context.” Id. at 844.
However, with corporate players, a different quantum of
expertise and knowledge is in play. Wisconsin courts have
recognized that ignorance is a less compelling excuse for
corporate enterprises in the context of the discovery rule.
See, e.g., Stroh Die Casting Co. v. Monsanto Co., 502 N.W.2d
132, 141 (Wis. App. 1993) (“[P]laintiffs may not close their
eyes to information, which through the exercise of reasona‐
ble business practice is accessible to them and which if un‐
covered would alert them to injury.”). In the case at hand,
both parties are experienced corporate players. KDC does
not argue, nor do we observe, that it lacked sophistication
and knowledge in the context of the financial dealings in
question. To the contrary, the corporation has been im‐
mersed in litigation of this conspiracy for many years, and in
the process has pursued several defendants who held posi‐
tions of trust in relation to the company. Its eyes were open
to the possibility of fraud committed by its fiduciaries and
agents. Accordingly, we do not find that the circumstances
justified a more forgiving application of the discovery rule to
KDC. KDC did not require “a greater degree of certainty”

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14 No. 13‐3678
than “initial suspicion” to trigger discovery of its alleged in‐
jury, and it certainly was not required to be convinced that
actual fraud had occurred, as KDC argues in its briefs.
So the question is when a reasonable corporate actor
would have had enough knowledge to think an investiga‐
tion was necessary. The district court concluded, and we
agree, that it is clear that KDC gained this knowledge when
Sullivan received the initial version of the KDC client file
from GPM in 2006. The file disclosed information that rooted
the allegations KDC decided to pursue against Gray Plant. It
highlighted that the law firm had a preexisting relationship
with Johnson, and unambiguously showed that Johnson and
Tenenbaum discussed the possibility of Johnson forming his
own company and purchasing KDC’s assets. There is even
an internal email, from Tenenbaum to Dasari, indicating that
Johnson discussed with Tenenbaum the potential of working
with Johnson in the future after someone else assumed
KDC’s note. The time records and work product disclosed in
the client file showed that GPM attorneys were intimately
involved in financing issues, and particularly in the transac‐
tions that formed the central axis of the conspiracy: prepar‐
ing 1099 forms for KDC employees, including Popko; evalu‐
ating options to quell dissent from unfriendly shareholders;
and, critically, the insider penny stock sale. And as can be
seen from the Wanke email shortly after the production of
the file, there was at least some suspicion that Gray Plant—
which had a prior relationship with defendant Johnson as
his “personal attorney”—would be complicit in Johnson’s
activities of defrauding the company.
These data points would have been cognizable to KDC
by June 2006, when it filed its amended complaint in the ini‐

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No. 13‐3678 15
tial suit and alleged with specificity the activities undertaken
by the conspirators. The amended complaint details the
penny stock sale; the threat to issue Stan Popko a Form 1099;
and the plan to bankrupt the company and purchase its as‐
sets at a discount price. So KDC, by June 2006 at the latest,
was aware that Gray Plant had done work for several central
components of the conspiracy. This was, unambiguously,
enough information to trigger KDC’s discovery that Gray
Plant may have defrauded KDC. While these documents
perhaps did not disclose the full extent of Gray Plant’s in‐
volvement with Johnson—and while later‐produced docu‐
ments may have helped KDC flesh out its theory against the
law firm—that does not toll the statute of limitations. The
file, viewed on its own, gave KDC enough information to
suspect that GPM was a central player in the events in ques‐
tion.
KDC urges us to rely on language found in O’Dell v.
Burnham, 21 N.W. 635 (Wis. 1884), which states that the stat‐
ute of limitations begins to run only with “[t]he discovery, or
the information which, upon diligent inquiry, would lead to
the discovery, of facts … as would impress a reasonable per‐
son with the belief that the transaction was, in fact, fraudu‐
lent.” Id. at 639. It argues that this language underscores that
the statute of limitations does not begin to run until a plain‐
tiff has objective evidence of the defendant’s specific role in
the fraud. By KDC’s account, the statute of limitations did
not begin to run until KDC deposed the GPM attorneys in
2008, and thereby learned that Gray Plant was representing
First Products, Inc. in matters unrelated to the present litiga‐
tion. They argue that only then did KDC have reason to sus‐
pect that the law firm was not merely a passive player, or
even a creditor who lost out on representation fees from the

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16 No. 13‐3678
company’s bankruptcy, but rather a potential conspirator
who stood to gain from Johnson’s cohort’s fraud and con‐
spiracy.
There are two problems with this argument. First, O’Dell
does not stand for the proposition that a plaintiff must have
more knowledge than that which would prompt a reasona‐
ble person to inquire further into the alleged fraud. The Wis‐
consin courts—in over a hundred years of interpreting
O’Dell and the discovery rule—have been clear that “actual
and complete knowledge of the fraud on the part of the
plaintiff is not necessary in order to set the limitation period
running.” Doe, 734 N.W.2d at 843 (quoting Koehler, 133
N.W.2d at 731). It is well‐understood that Wisconsin courts
impute knowledge to a party when it “finds out enough to
cause a reasonable [party] to make sufficient inquiries to dis‐
cover a fraud.” Owen v. Wangerin, 985 F.2d 312, 315 (7th Cir.
1993) (interpreting Wisconsin law). No law supports KDC’s
assertion that financial motive was a required element to
trigger discovery. As we state above, the knowledge that
KDC had prior to the deposition was enough to cause a rea‐
sonable party to make a further inquiry: KDC knew about
GPM’s preexisting relationship with Johnson (including the
fact that Johnson and the law firm had discussed the very
possibility of bankrupting the company and using another
company to purchase KDC assets), as well as the law firm’s
involvement in the key transactions that Johnson and the
other defendants used to defraud the company. Evidence of
Gray Plant’s financial incentive to assist Johnson, while per‐
haps helpful to proving the ultimate fact of fraud, was not
required to trigger the discovery. The client file, standing
alone, should have been enough to cause KDC to make a
deeper investigation into any alleged fraud by GPM.

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No. 13‐3678 17
Second, we are not convinced that the fact of GPM’s rep‐
resentation of First Products raised any novel “objective evi‐
dence” of fraud. KDC argues that we should draw from
Gray Plant’s representation the inference that the law firm
had a vested financial interest in the success of the conspira‐
tors’ schemes. However, this does not seem to us a reasona‐
ble inference: the record below shows, and KDC does not
dispute, that GPM received reasonable attorney fees in rela‐
tion to its representation, nothing more. By arguing that the
representation of First Products was a smoking gun, KDC
would have us conclude that it is reasonably inferable that a
law firm would undertake a fraud and conspiracy of its for‐
mer client in order to receive payment for services rendered
at its established rate. But “[a] motion for summary judg‐
ment requires the court to consider only reasonable infer‐
ences, not every conceivable inference.” Box v. A & P Tea Co.,
772 F.2d 1372, 1379 (7th Cir. 1985). In the absence of addi‐
tional, specific facts making this inference plausible—either
an extraordinary financial boon to GPM, or some specific da‐
tum showing that Johnson conscripted Gray Plant and its
attorneys as conspirators—we do not see the depositions as
a turning point in KDC’s knowledge. Long before the depo‐
sitions, Plaintiff‐Appellant already had knowledge that GPM
assisted in the valuation of the stock and the penny‐stock
purchase, and had a preexisting relationship with Johnson.
From the contents of the client file, KDC even had notice that
GPM expected to receive additional work after KDC’s bank‐
ruptcy, should KDC’s assets be purchased by another com‐
pany. The representation of First Products, Inc. does not add
in a meaningful way to that reservoir of knowledge.

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18 No. 13‐3678
Accordingly, the district court was correct in determining
that Plaintiff‐Appellant’s claims were barred by Wisconsin’s
statute of limitations.
B. Estoppel
In the alternative, KDC urges that Gray Plant should be
estopped from asserting a statute of limitations defense, be‐
cause it withheld 77 pages of handwritten notes and several
other documents that were disclosed years after the initial
production of the client file, including several key emails.
Under Wisconsin law, “a defendant who fraudulently con‐
ceals a conspiracy is estopped to assert the statute of limita‐
tions as a defense.” City of Madison v. Hyland, Hall & Co., 243
N.W.2d 422, 432 (Wis. 1976). “The aggrieved party must
have failed to commence an action within the statutory peri‐
od because of his or her reliance on the defendant’s repre‐
sentations or act.” Hester v. Williams, 345 N.W.2d 426, 431
(Wis. 1984). However, “if the defendant’s behavior, whenev‐
er begun and however ill intentioned, fails to prevent the
plaintiff from learning that he has a claim in time to sue
within the statutory period … again the behavior has no
causal significance.” Jay E. Hayden Found. v. First Neighbor
Bank, N.A., 610 F.3d 382, 385 (7th Cir. 2010).
We do not condone Gray Plant’s errors in producing
documents from the client file. As a former client, KDC was
entitled to Gray Plant’s prompt and accurate delivery of
documents relating to the law firm’s representation. See Re‐
statement (Third) of Law Governing Lawyers § 46(1), (3) (2000).
However, as the case comes to us, we need not reach the
question of whether GPM deliberately or fraudulently with‐
held the documents in question: it is clear that KDC had
knowledge of its cause of action against Gray Plant within

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No. 13‐3678 19
the statutory period. The law firm’s behavior thus has no
causal significance, and cannot estop the statute of limita‐
tions defense.
There are several clear indications that KDC had the
knowledge to sue Gray Plant within the statutory period.
The clearest is KDC’s demand letter to GPM dated March 26,
2012, enclosing a draft complaint. It is obvious from the
complaint and the letter that the company had learned of its
potential cause of action by that date, which is within the
six‐year period calculated starting the day Sullivan received
the file from Gray Plant. But even before that date, the com‐
pany and its employees had sufficient knowledge to file this
suit. Attorney Erhard’s internal emails show that he had rec‐
ognized, and alerted KDC’s bankruptcy trustee, to the po‐
tential lawsuit by July 14, 2011, and even flagged the statute
of limitations issue to KDC’s attention. He stated that “[a]s it
relates to the applicable statutes of limitations, we calculate
that if at all possible the suit against Gray, Plant, Mooty
should be filed by no later than the end of August [2011].”
And we cannot overlook the fact that in arguing to us about
the discovery rule, KDC adamantly claims that it discovered
the potential fraud at the Bohl and Tenenbaum depositions
in September 2008, more than three and a half years before
the statutory period would run.
These representations make clear that the belated disclo‐
sures made by Gray Plant did not prevent KDC from learn‐
ing of its cause of action against the law firm within the stat‐
utory period. We decline to estop Gray Plant from asserting
the statute of limitations affirmative defense.

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20 No. 13‐3678
III
For the foregoing reasons, we AFFIRM the district court’s
judgment.

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