In the
United States Court of Appeals
For the Seventh Circuit

No. 00-1718

The Whitlock Corporation, formerly known
as Apex Automotive Warehouse, L.P.,

Plaintiff-Appellant,

v.

Deloitte & Touche, L.L.P.,

Defendant-Appellee.



Appeal from the United States District Court for
the
Northern District of Illinois, Eastern Division.
No. 99 C 2537--Rebecca R. Pallmeyer, Judge.


Argued October 27, 2000--Decided December 7,
2000



  Before Easterbrook, Kanne, and Rovner,
Circuit Judges.

  Easterbrook, Circuit Judge. In January
1995 Apex Automotive Warehouse, a
wholesaler of auto parts, purchased from
WSR Corporation the stock of Whitlock
Corporation, a retailer of auto parts. As
is common in transactions of this kind,
the closing price was calculated on the
basis of pro forma financial statements
that the seller had prepared, and whose
accuracy the seller warranted. See LHLC
Corp. v. Cluett, Peabody & Co., 842 F.2d
928 (7th Cir. 1988). These hastily
prepared statements were to be followed
up by a more complete estimate of the
assets’ value, to be performed by wsr’s
auditor Deloitte & Touche, with
adjustments to the price made
accordingly.

  Within months Apex encountered financial
distress as a result of the transaction,
or at least with the price paid for the
retail stores and their inventory, and in
1996 it entered bankruptcy, where it
reorganized jointly with Whitlock and was
merged into a single firm. (The surviving
entity has the Whitlock name, but we use
Apex in this opinion to avoid confusion.)
wsr and Deloitte never tendered a post-
closing report to facilitate a price
adjustment. The adversary proceeding now
before us represents an effort to recover
from Deloitte, for the benefit of Apex’s
creditors, on the theory that Deloitte
committed fraud by failing to alert Apex
that the Whitlock stock had been
overvalued. Apex has disavowed any claim
under the federal securities laws, which
include not only a one-year statute of
limitations but also a three-year statute
of repose, Lampf, Pleva, Lipkind, Prupis
& Petigrow v. Gilbertson, 501 U.S. 350
(1991); Short v. Belleville Shoe
Manufacturing Co., 908 F.2d 1385 (7th
Cir. 1990), and rests its hopes on the
law of Illinois, which the parties agree
supplies the rule of decision. For claims
under Illinois law against accountants
the statute of limitations is two years,
735 ILCS 5/13-214.2(a), commencing when
the plaintiff "knew or reasonably should
have known" not only of its injury but
also that the injury may have had a
wrongful cause. See Knox College v.
Celotex Corp., 88 Ill. 2d 407, 415, 430
N.E.2d 976, 980 (1981). Apex added
Deloitte to the adversary proceeding in
May 1998, so if its claim accrued before
May 1996 it has expired. Both the
bankruptcy court, 1999 Bankr. Lexis 209
(Bankr. N.D. Ill. Mar. 9, 1999), and the
district court, 2000 U.S. Dist. Lexis 2045
(N.D. Ill. Feb. 17, 2000), concluded that
the statute of limitations has run and
dismissed Deloitte as a defendant. A
partial final judgment under Fed. R.
Bankr. P. 7054 and Fed. R. Civ. P. 54(b)
enables us to resolve Apex’s appeal while
its suit against wsr continues in the
bankruptcy court.

  Bankruptcy Judge Katz relied on three
principal considerations when granting
summary judgment to Deloitte. First, one
of Apex’s accountants sent its general
partner a memorandum in April 1995
stating that "what they did to us was to
intentionally mislead you as to how they
would value the inventory." That
memorandum showed strong suspicion, if
not actual knowledge, of both injury and
a wrongful cause, starting the period of
limitations, the bankruptcy judge
concluded. Second, Apex filed suit in
October 1995 accusing both wsr and
Deloitte of miscalculating the value of
certain items that entered into the price
Apex paid for the Whitlock stock. Again
that suit (soon dismissed because
Deloitte’s presence as a defendant
spoiled diversity of citizenship)
revealed suspicion, if not actual
knowledge. Third, on October 6, 1995, the
president of Apex’s general partner sent
Deloitte a letter stating, among other
things:

Apex’s lawyers are continuing their
investigation into whether wsr and/or
Deloitte face liability for damages
arising from (1) an adverse material
change in the condition of the business;
(2) breaches of representations and
warranties with respect to wsr’s financial
statements; (3) other omissions, errors
and irregularities in wsr’s books, records
and audited financial statements; and (4)
other breaches of the Stock Purchase
agreement.

This letter, the bankruptcy court
concluded, showed that by October 1995
(10 months after the closing) Apex was on
inquiry concerning both injury and
causation; and because the Illinois
statute of limitations starts to run when
a reasonable person would have commenced
an inquiry, the time for suit expired no
later than October 1997. The district
court agreed with these conclusions.

  Apex’s appeal is founded on two legal
misconceptions. The first is that in
bankruptcy (and diversity) cases federal
courts follow state rules about the
allocation of issues between judge and
jury. They do not; federal rules always
control in federal court. Mayer v. Gary
Partners & Co., 29 F.3d 330 (7th Cir.
1994). Apex believes that Illinois favors
jury decision of disputes about the
commencement of the period of
limitations. That may be so, but in
federal court Fed. R. Civ. P. 56 provides
that only a material dispute about an
issue of fact requires trial; there is no
preference for trial on a dispute that
can be resolved by a judge using
(materially) undisputed facts. Celotex
Corp. v. Catrett, 477 U.S. 317 (1986);
Wallace v. SMC Pneumatics, Inc., 103 F.3d
1394, 1396 (7th Cir. 1997).

  The second misconception is that the
period of limitations starts defendant-
by-defendant, rather than injury-by-
injury. The period of limitations began
to run against wsr no later than April
1995, when (as the accountant’s letter of
that month shows) Apex already believed
that chicanery had occurred in the
valuation of Whitlock’s inventory. By
then Apex not only knew of its injury
(about which it learned promptly after
the closing in January 1995) but also
strongly suspected that its injury had a
wrongful cause. But, Apex insists, the
April 1995 letter is ambiguous: the word
"they" in the statement "what they did to
us was to intentionally mislead you"
could refer only to actors at wsr. It was
in the dark for longer, Apex submits,
about Deloitte’s role. Maybe so, but if
Apex’s claim accrued in April 1995, then
time started running with respect to all
potentially responsible persons. See
LeBlang Motors, Ltd. v. Subaru of
America, Inc., 148 F.3d 680, 690-92 (7th
Cir. 1998) (Illinois law); City National
Bank of Florida v. Checkers, Simon &
Rosner, 32 F.3d 277, 283-84 (7th Cir.
1994) (Illinois law); Central States
Pension Fund v. Navco, 3 F.3d 167, 171
(7th Cir. 1993) (federal common law);
Young v. McKiegue, 303 Ill. App. 3d 380,
388, 708 N.E.2d 493, 500 (1st Dist.
1999). Apex could have used the ensuing
years to determine who was to blame, and
of course it did not have to search hard
to find Deloitte. Apex has not cited any
decision by an Illinois court standing
for the proposition that the statute of
limitations for a single injury starts to
run at different times against different
potentially responsible persons. It does
cite decisions by two federal district
courts. See Antell v. Arthur Anderson
LLP, 1998 U.S. Dist. Lexis 7183 (N.D. Ill.
April 30, 1998); Ventre v. Datronic
Rental Corp., 1996 U.S. Dist. Lexis 17501
(N.D. Ill. Nov. 18, 1996). But Antell,
which was rendered before LeBlang and
Young (and failed to discuss either City
National Bank or Navco), cannot be deemed
authoritative, and Ventre held only that
the commencement of the limitations
period with respect to one injury does
not start the time with respect to a
different injury caused by a different
person through a different fraudulent
means. Apex’s claim concerns a single
injury, the allegedly inflated price it
paid for wsr’s stock in Whitlock.

  True enough, tolling rules may extend
the time by different amounts with
respect to different parties that have
behaved differently, and Apex argues that
Deloitte fraudulently concealed its role.
See generally Cada v. Baxter Healthcare
Corp., 920 F.2d 446 (7th Cir. 1990)
(discussing the scope of both equitable
tolling and equitable estoppel). Still,
the claim against Deloitte accrued, and
the clock began to tick, no later than
April 1995. It has continued ticking,
too, because Apex has adduced no evidence
of "concealment," fraudulent or
otherwise, by Deloitte. Simple denials of
liability do not toll the period of
limitations or estop the adverse party to
rely on it. Singletary v. Continental
Illinois National Bank, 9 F.3d 1236 (7th
Cir. 1993). Apex does not contend that
Deloitte spoliated evidence or lied in
response to inquiries; rather its
fraudulent-concealment theory is that
Deloitte owed it a fiduciary duty, so
that tolling continued until Deloitte
came forward with the truth. On this
view, the time to sue could be postponed
until after the litigation was over, if
Deloitte continued to deny culpability.
That is not the function of the
fraudulent-concealment principle; even a
fiduciary is entitled to the benefit of
the statute of limitations without a need
to confess to wrongdoing. Although
Illinois sometimes allows a fiduciary’s
silence to toll a period of limitations,
see Chicago Park District v. Kenroy,
Inc., 78 Ill. 2d 555, 562, 402 N.E.2d
181, 185 (1980), that possibility does
Apex no good, for Deloitte was not its
fiduciary. Apex did not hire Deloitte to
look out for its interests in the
transaction; Deloitte was wsr’s auditor,
and Apex dealt with wsr at arms’ length.
As part of the sale wsr and Apex jointly
engaged Deloitte to perform certain
auditing functions, but Deloitte could
not sensibly have served as a fiduciary
to both buyer and seller in the
transaction, obliged to favor Apex’s
position over wsr’s--and to favor wsr’s
position over Apex’s at the same time.

  Deloitte may well have had contractual
duties to both principals in the
transaction, but adding the word
"fiduciary" does not help us understand
the nature of these duties or the period
within which to initiate litigation about
them. Deloitte served as an informational
intermediary to a firm that was itself an
expert in the auto parts business, so its
silence about details that affected the
calculation of the purchase price did not
amount to fraudulent concealment. Apex
hired a separate accountant to check on
Deloitte’s work, a step that makes it
even harder to see why Deloitte’s silence
should postpone litigation. Moreover,
Apex concedes that Deloitte was not its
fiduciary at the time the first set of
financial statements (before closing) was
prepared, and it is these financials that
Apex contends were fraudulent. Apex could
not count on any duties Deloitte may have
assumed with respect to later
transactions or statements to induce a
duty of candor with respect to documents
prepared earlier. See Lagen v. Balcor
Co., 274 Ill. App. 3d 11, 20, 653 N.E.2d
968, 975 (2d Dist. 1995).

  Nor did Deloitte’s occasional soothing
assurances to Apex create an equitable
estoppel that keeps the suit alive. As
the bankruptcy court observed, none of
the supposedly lulling statements on
which Apex now relies occurred after
October 1995; by then Apex and Deloitte
had adversarial relations. Unless
equitable estoppel postponed the time
past May 1996, however, the suit is
untimely. Like the bankruptcy and
district courts, therefore, we find it
unnecessary to decide whether some time
could be excluded by equitable tolling.
No view of the record would entitle Apex
to the exclusion of enough time to make a
difference.

Affirmed
