                                   ___________

                                   No. 95-1494
                                   ___________

Sandra Barry, also known as            *
Sandra Barry Lieberman,                *
an individual,                         *
                                       *
           Appellant,                  *     Appeal from the United States
                                       *     District Court for the
     v.                                *     District of Minnesota.
                                       *
Charles L. Barry, Melanie G.           *
Barry, Lawrence Swartz, Marcia         *
Barry Swartz, Twin City Fan            *
and Blower Company, a                  *
Minnesota corporation,                 *
                                       *
           Appellees.                  *

                                   ___________

                   Submitted:      October 17, 1995

                          Filed:   March 12, 1996
                                   ___________

Before McMILLIAN, BOWMAN, and WOLLMAN, Circuit Judges.
                               ___________


WOLLMAN, Circuit Judge.


     Sandra Barry Lieberman appeals the district court's grant of summary
judgment to defendants on her claims for fraud, breach of fiduciary duty,
and breach of contract surrounding the sale of her shares of stock in a
family-owned business.    Because we find that factual questions remain, we
reverse and remand for a jury determination of the issues.


                                       I.


     Lieberman owned one-third of the shares of stock in Twin City Fan and
Blower Company (Twin City), a Minnesota corporation founded by her father.
Lieberman's brother, Charles Barry, and his wife,
Melanie Barry, and Lieberman's sister, Marcia Barry Swartz, and her
husband, Lawrence Swartz (the Barrys), owned the remaining shares in equal
proportions.     Charles Barry and Lawrence Swartz managed the company.
Lieberman, who lived in California where she worked as a special education
teacher, had no involvement in the company.


        In May 1983, Lieberman received a telephone call and a letter from
Richard Fitzgerald, Twin City's attorney, informing her that the company
was losing money and that the managing shareholders were contemplating
moving the company to South Dakota, which would require additional capital
input by the shareholders and increased personal financial risks.       The
letter advised Lieberman not to undertake those risks, as she was not
involved in the management of the company, and recommended that she sell
her shares of the stock to Twin City.   The letter suggested that Twin City
would buy Lieberman's stock for a $335,000 lump sum payment due in ten
years, plus an additional $25,000 every year until the lump sum payment was
made.


        Lieberman retained California and Minnesota attorneys while she
considered her options.     Twin City provided Lieberman's attorneys with
financial statements that showed a 1982 loss of $138,865 and an "Internal
Mgmt Report" for 1983 that showed losses in each of the first five months
of the year totalling $168,895.      Lieberman was reluctant to sell her
shares, however, because her father had stressed to her never to sell.


        In June 1983, the Barrys sent Lieberman notice of a Twin City
shareholder meeting and announced a merger plan under which Lieberman would
receive $125,000 for her 5,000 shares and informed her that she could
pursue her dissenting shareholder's rights under Minnesota law.   Believing
that she was being forced to sell her shares and that she would receive
less under the Minnesota dissenter's rights statute than the Barrys had
originally offered based on the financial information she had been given,
Lieberman




                                    -2-
accepted the terms set out in Fitzgerald's original letter.


      In October 1983, Lieberman signed a stock redemption agreement to
sell her stock according to the terms stated in the letter.         The agreement
included a general release clause.        It also provided that if the Barrys
undertook   certain   stock    transactions   Lieberman's   note    would   become
immediately due, with Lieberman to then receive 10% of any profits in
excess of $1 million.    Lieberman's mother agreed to guarantee Twin City's
note to Lieberman.    Lieberman's mother also placed one-third of her estate
in an irrevocable trust for Lieberman.


      In 1988, without informing Lieberman, the Barrys initiated a series
of transactions that affected the corporate structure of Twin City and
which resulted in the Barrys owning stock in their same proportion in
another corporation, which will be discussed in greater detail in Section
V.   In 1990, Twin City paid Lieberman the $335,000 lump sum that was due
in 1993.


      In 1991, Lieberman received a call from Charles Barry, who told her
that he had bought out the Swartzes' stock for $15 million.              This led
Lieberman   to   investigate    whether   she   was   entitled     to   additional
consideration under the terms of the stock redemption agreement.         Lieberman
found that in 1983 Twin City had submitted financial statements to South
Dakota bond underwriters showing figures for the company's operations
different from those which she had been given.        The numbers submitted to
the underwriters showed that Twin City had actually made a profit from
January to May of 1983, whereas the numbers Lieberman had been given showed
a loss for the company during each of those months.         She also discovered
the company's 1988 stock transactions.


      Lieberman then brought this action against the Barrys and Twin City,
alleging seven causes of action.          The district court granted summary
judgment to the Barrys and Twin City on all except the




                                      -3-
breach of contract claim.           The court found that the six-year statute of
limitations barred Lieberman's remaining claims, including her fraud and
breach    of    fiduciary    duty   claims,     because      "through       the     exercise   of
reasonable      diligence     plaintiff      could    have       discovered    those     alleged
misrepresentations more than six years prior to commencement of this
action."       The court additionally held that the claims would be barred by
the    release    Lieberman      signed,    finding       that    because     the    statute   of
limitations barred her fraud claim, Lieberman could not claim that the
stock redemption agreement was unenforceable.                     The court denied summary
judgment, however, on Lieberman's breach of contract claim relating to Twin
City's 1988 transactions, after finding that a question of fact existed as
to whether the corporate changes that took place in 1988 were included in
the contract language and required a determination of the parties' intent.


        After the case was transferred to another judge, however, the court
granted the Barrys and Twin City summary judgment on the breach of contract
claim as well, finding that because ownership of the stock did not change,
the reorganization was not a "sale" within the plain meaning of the word.
Lieberman appeals only the dismissal of her fraud, breach of fiduciary
duty, and breach of contract claims.


        We review the district court's grant of summary judgment de novo, and
we will affirm if the evidence, viewed in the light most favorable to the
non-moving party, shows that no dispute of material fact exists and that
the moving party is entitled to judgment as a matter of law.                        Michalski v.
Bank of America Ariz., 66 F.3d 993, 995 (8th Cir. 1995).                      Because this is
a     diversity    case,    we    also     review    de    novo     the     district     court's
interpretation of state law.         Id.     (citing Salve Regina College v. Russell,
499 U.S. 225, 231 (1991)).




                                             -4-
                                    II.


     We first address Lieberman's motion to strike supplemental documents
submitted to this court by the Barrys and Twin City.   These documents were
not part of the record before the district court when it entered its order
granting partial summary judgment.        We will consider only evidentiary
materials that were before the trial court at the time the summary judgment
ruling was made.   Fed. R. App. P. 10(a); Amerinet, Inc. v. Xerox Corp., 972
F.2d 1483, 1489-90 (8th Cir. 1992), cert. denied, 506 U.S. 1080 (1993).
Excluded from the appellate record is evidence that was submitted to the
trial court subsequent to the ruling.      United States East Telecommun. v.
US West Commun. Servs., Inc., 38 F.3d 1289, 1301 (2d Cir. 1994).   Although
the district court had the right to change its previous summary judgment
ruling until the order was final, see Fed. R. Civ. P. 54(b), it did not do
so; thus, the district court did not address the significance of the
additional information to the statute of limitations and release issues.


     Those cases which hold that we may expand the record on appeal are
readily distinguishable.   In Dakota Industries, Inc. v. Dakota Sportswear,
Inc., 988 F.2d 61, 63-64 (8th Cir. 1993), we allowed the parties to expand
the record because the parties had not had a chance to complete discovery
and because one party's misrepresentation left the district court with an
incomplete picture.    We noted that the authority to enlarge a record is
rarely exercised and constitutes a narrow exception to the general rule
that it is only the record made before the district court which the
appellate court may consider.    Id. at 63.    In Miller v. Benson, 51 F.3d
166, 168 (8th Cir. 1995), we allowed the pro se appellant to expand the
record because he did not learn that the district court had not received
his motion until after that court dismissed his case.




                                    -5-
     The Barrys and Twin City offer no reason why the records they now
wish to submit were not submitted with the initial motion for summary
judgment.    We thus grant Lieberman's motion to strike portions of Barrys'
and Twin City's addendum and appendix, and we will not consider the
arguments which rely on the stricken evidence.


                                    III.


     We next address the Barrys' and Twin City's argument that Lieberman's
fraud claim is barred by Minnesota's six-year limitations period for such
claims.     See Minn. Stat. § 541.05, subd. 1(6) (1992).     We find that a
factual question exists as to whether Lieberman could have discovered with
reasonable diligence that Barrys gave her false financial figures.


     The six-year limitations period begins to run when a plaintiff knew
or should have known of the fraud.     See Estate of Jones v. Kvamme, 449
N.W.2d 428, 431 (Minn. 1989).     The question of when discovery could or
should have reasonably been made is one of fact.   Id.   The plaintiff bears
the burden of proving that she could not, through reasonable diligence,
have discovered the facts constituting the fraud until within six years of
the commencement of the action.      Blegen v. Monarch Life Ins. Co., 365
N.W.2d 356, 357 (Minn. Ct. App. 1985).


     In finding that Lieberman did not exercise reasonable diligence, the
district court stated that Lieberman was "sufficiently skeptical of
defendants' motivations in pursuing the buyout to raise suspicions that
defendants might not be completely forthcoming in the information provided
to [her]."   The court pointed out that Lieberman felt as though the Barrys
were telling her they wanted a "divorce"; she felt the Barrys would do
whatever it took to force her out of the company; she immediately retained
attorneys, who negotiated a detailed contract for her; she enlisted




                                    -6-
a friend to help her analyze the company's financial position; she obtained
a guaranty on the note from her mother; and she protected her right to
inherit one-third of her mother's estate.


     Lieberman submitted the affidavit of Robert Bartkus, Twin City's
Controller from 1976-80 and 1982-86, who attested that he had prepared the
books for the South Dakota bond issue, that he did not prepare the
statements that Lieberman received, and that both sets of financial
statements could not be correct.    He attested that the statements given to
Lieberman were truthful in the areas that could be easily verified, and
were believable based on the 1982 statement, but that one principal
difference between the two sets of statements related to "material from
inventory."   According to Bartkus, finding the true data in that area would
have required an audit of physical inventory, which might have necessitated
a one-day plant shutdown.   Such verification was not required even for Twin
City's bond offering.


     We   disagree   with   the    district   court's   conclusion   that   the
circumstances triggered a duty by Lieberman to check into the truthfulness
of the data the Barrys provided to her.        Although some of the factors
recited by the district court may have made it unreasonable for Lieberman
to rely on the Barrys' characterization of the financial condition of the
company, Lieberman did not rely on those characterizations.      Instead, she
hired attorneys and consulted a financial advisor to advise her about the
company's financial position.     Lieberman's advisors, however, were unable
to discover the company's true financial condition because of the Barrys'
fraudulent concealment of the profits for 1983.    See Continental Assurance
Co. v. Cedar Rapids Pediatric Clinic, 957 F.2d 588, 593 (8th Cir. 1992)
(false financial statements on company's letterhead were sufficient for the
jury to find active concealment and toll federal statute of limitations);
Cohen v. Appert, 463 N.W.2d 787, 790 (Minn. Ct. App. 1990) (to toll
limitation period, fraudulent concealment must be intentional and




                                      -7-
must prevent discovery of cause of action).


     The Barrys and Twin City argue that because the correct financial
information was a matter of public record during Twin City's bond offering,
Lieberman could have found the information at that time, and that Lieberman
foreclosed any opportunity to later discover the fraud by cutting herself
off from her family and refusing to communicate with them.      We find no
obligation under Minnesota law, however, for a plaintiff to investigate
after the fact.   Because the bond offering and lack of communication came
after Lieberman had already sold her stock, she was not guilty of lack due
diligence by failing to later discover the fraud.


     The Barrys and Twin City also argue that Lieberman would have
discovered the false information if she had pursued her dissenter's rights
under the Minnesota statute.   Lieberman argues, however, that according to
the financial information available to her at the time, she had every
reason to believe such action would leave her in a worse position than
accepting the Barrys' original offer.


     We conclude that a jury could reasonably believe that Lieberman
exercised due diligence in accepting the financial statements as true
without putting the company through an extensive audit of its physical
inventory or without fruitlessly pursuing her dissenter's rights.


                                    IV.


     We next turn to the issue whether the release signed by Lieberman was
valid and whether it bars her fraud claim.    We find, again, that factual
issues remain to be determined whether the Barrys fraudulently induced
Lieberman to sign the release.


     A release may be invalidated if fraud "touches" it.          Noble v.
C.E.D.O., Inc., 374 N.W.2d 734, 744 (Minn. Ct. App. 1985).




                                    -8-
Lieberman argues that the Barrys' fraudulent financial figures induced her
to sign the release.   The Barrys and Twin City argue that Lieberman could
not justifiably rely on the financial information, given the relationship
of the parties at the time of the release.


     The Barrys and Twin City submitted to the district court a letter
from Twin City's attorney, Fitzgerald, to Lieberman's attorney, which in
part refused an apparent attempt by Lieberman's attorney to have the Barrys
warrant that the financial information they provided was true.   The refusal
was based on a desire to "wipe[] the slate clean," and on the Barrys'
belief that if they made a lot of money by moving to South Dakota a future
claim by Lieberman would be unfair.    The Barrys and Twin City argue that
the refusal to provide the requested warranty rendered Lieberman's reliance
on the financial information unjustified.


     We believe that Fitzgerald's refusal leaves the impression that the
Barrys were unwilling to warrant the future projections they had provided,
rather than that the historical financial information was false.   We cannot
say that Fitzgerald's refusal made Lieberman's reliance on the false
financial information unjustified as a matter of law.    Cutting against the
refusal are the apparent truthfulness of the information and the family
relationship.   Under Minnesota law, a party may rely on the truthfulness
of business records unless their falsity is obvious.    Speiss v. Brandt, 41
N.W.2d 561, 566 (Minn. 1950).


     The Barrys and Twin City also argue that fraud claims can be released
and that if the release in this action is not valid, no release could be
valid.   The Barrys and Twin City fail to recognize, however, the difference
between releasing mature fraud claims that a plaintiff knows exist, and
releasing the very fraud that induced the plaintiff to sign the release.
Although the later discovery of additional fraud does not invalidate the
release of a




                                    -9-
mature fraud claim, see Bellefonte Re Ins. Co. v. Argonaut Ins. Co., 757
F.2d 523, 527 (2d Cir. 1985), the same principle does not apply when a
plaintiff who justifiably relies on fraudulent information is induced to
sign a release for fraud claims that she did not know existed.


                                             V.


      Finally, we address Lieberman's breach of contract claim.                    Among
other things, the contract provided that Lieberman would receive additional
consideration in the event "(4) the sale of shares of the Corporation . . .
to the Corporation which results in . . . the Corporation owning 80% or
more of the outstanding shares of the Corporation."


      The specific corporate changes that took place in 1988 were as
follows:      (1) Twin City was renamed TCF Blower Division; (2) the Barrys
formed two other separate corporations, TCF Axial Division, Inc. and TCF
Industries, Inc.; (3) the Barrys' shares in TCF Blower Division were
cancelled; (4) both the Blower Division and the Axial Division issued
10,000 shares of stock each to TCF Industries; and (5) TCF Industries
issued 2,500 shares of stock to each of the Barrys.             Lieberman argues that
the transaction constituted a sale of shares to the corporation in exchange
for   stock    in   TCF   Industries   and    that   she   is   thus   owed   additional
consideration under the fourth scenario in the contract.


      In the first district court opinion, the court found that "the 1988
changes were arguably triggering events within the literal terms of the
contract," but found that there was evidence that the parties did not
intend Lieberman to receive additional consideration unless the corporation
came under the control of outsiders.              Thus, the court found that a jury
issue remained.      After the case was transferred, the successor court found
that there was "no sale in the traditional or common sense of the term,"




                                         -10-
as there was not a buyer and seller.


     Under Minnesota law, the court must first determine as a matter of
law whether a contract is ambiguous.        Lamb Plumbing & Heating Co. v. Kraus-
Anderson of Minneapolis, Inc., 296 N.W.2d 859, 862 (Minn. 1980).                    A
contract is ambiguous if its language is reasonably susceptible to more
than one interpretation.    Trondson v. Janikula, 458 N.W.2d 679, 681 (Minn.
1990).    The court should consider the context in which a word is being used
to determine whether it is ambiguous, Board of Regents v. Royal Ins. Co.
of America, 517 N.W.2d 888, 892 (Minn. 1994), and must give all terms their
plain, ordinary meaning so as to effect the intent of the parties, Davis
v. Outboard Marine Corp., 415 N.W.2d 719, 723 (Minn. Ct. App. 1987).                If
a contract's terms are ambiguous, the court will consider extrinsic
evidence, and construction of the contract becomes a question of fact.             Id.


     Even under the plain, ordinary meaning of the term "sale," we find
that the term is ambiguous in the context of selling shares back to the
corporation.     A sale is defined as "[a] contract between two parties,
called,    respectively,   the   "seller"    (or   vendor)   and   the   "buyer"   (or
purchaser), by which the former, in consideration of the payment . . . of
a certain price in money, transfers to the latter title and possession of
the property."     Blacks Law Dictionary (6th ed. 1990) at 1337.             In this
instance, the Barrys transferred their stock to Twin City and received as
consideration shares of stock in another corporation, TCF Industries.              The
definition does not contemplate whether the actual control of the shares
must be transferred in a real sense, and we find both Lieberman's and the
Barrys' and Twin City's interpretations plausible.           There appear to be no
Minnesota decisions determining as a matter of law whether a true change
of control is necessary for a party to sell shares back to the corporation.
We thus remand for a jury to consider extrinsic evidence to determine
whether the parties intended that the shares




                                      -11-
needed to change control in a real sense before Lieberman's rights under
the agreement would be triggered.


     The judgment is reversed and the case is remanded for trial.


     A true copy.


           Attest:


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




                                    -12-
