Fraudulent concealment tolls statute of limitations

Where a defendant affirmatively acts to conceal a cause of action, the statute of limitations is tolled until the concealment is discovered, and it is immaterial whether the cause of action has accrued when the intentional, fraudulent concealment occurs.

In this case, defendant “made an affirmative act to conceal his planned conversion of … stock from each of its rightful owners.” The statute of limitations is tolled for all plaintiffs.

Defendant is liable for $259,212 in compensatory damages and $100,000 in punitive damages.

Tolling

As an initial matter, Code § 8.01-229(D) “does not require that the cause of action have accrued at the time of the affirmative act of concealment. … Accordingly, if the defendant did engage in an affirmative act intended or designed to conceal his later conversion of Trigon stock, the statute of limitations is tolled until that concealment was discovered. …

“No court of Virginia … has had to directly answer whether a misrepresentation can be made prior to the tortious act. … [T]he intent behind this statute is clear and instructive for this purpose. At its core, the statute is intended to protect plaintiffs from defendants’ ‘intentional, fraudulent acts to conceal discovery of a cause of action.’ … The intentional, fraudulent act of concealment before the accrual of a cause of action is no less harmful than an identical act that occurred after the accrual.”

Concealment “must consist of affirmative acts of misrepresentation.” Further, the “misrepresentation must be ‘designed or intended’ to obstruct the filing of the action; the delay must not be incidental to the true intention of the obstructer. … ‘Concealment by mere silence is not enough.’”

Does tolling apply?

Whether the tolling statute applies depends on whether plaintiffs have shown that defendant made an affirmative act of misrepresentation intended to conceal a cause of action, that the misrepresentation did in fact conceal the cause of action and that plaintiffs did not act within the statute of limitations due to the misrepresentation. “I find that this has been established, that § 8.01-229(d) does apply to this case, and that the statute of limitations was tolled until May 2015.”

Conversion

Defendant’s “actions constitute conversion. … At the time [defendant] converted the stock to his possession, the estates of his former partners had actual rights to that stock. He admitted this during his testimony. … [He] had no right to possess the Trigon stock. Dodson, Pence, Viar and Woodrum had an ongoing relationship with the issuing corporation in 1997. [Defendant] did not. Viar was aware of the stock in 1997 but did not notify [defendant]. Furthermore, Dodson, Pence, Viar, Woodrum & Mackey was dissolved when the stock was issued. It could not legally receive new property at that time. [Defendant] was never entitled to the stock and wrongfully exercised control over it to the exclusion of its rightful owners in 2009.”

Damages

The proper measure of damages for converted stock “is the highest intermediate value of the stock between the time of the conversion and a reasonable time after the owner received notice of the conversion.”

Plaintiffs received notice of the conversion on May 21, 2015. The stock was valued at $164.62 per share on that date. Allowing for the number of shares converted, plus interest for the six years between the conversion and plaintiffs’ notice, compensatory damages of $259, 212 are awarded.

Punitive damages of $100,000 are awarded as well.

McDannald, Executrix of the Estate of Dodson v. Mackey Jr. CL-15-2288, Jan. 3, 2018; Roanoke Cir. Ct. (Franklin). Arthur P. Strickland, Anthony M. Segura, Timothy E. Kirtner for the parties. VLW 019-8-081, 5 pp.