Unpublished Disposition, 872 F.2d 428 (9th Cir. 1989)

87-3623.

United States Court of Appeals, Ninth Circuit.

Jan. 10, 1989.

ORDER

(Rehearing of 852 F.2d 571)

Plaintiffs-Appellants Charlotte and Kevin Kelly's motion for a rehearing is denied.

Defendant-Appellee New England Rare Coin Galleries' motion for a rehearing is granted in part. We vacate section VI of the Memorandum disposition and modify the Memorandum as follows:

Section I at p. 2, first line, delete the following:

"in part and reverse in part"

Section III at p. 3, first sentence, delete "In October" and insert "On March 1,".

Section III at p. 3, delete the last sentence of the first paragraph and replace it with the following:

New England also moved for summary judgment claiming that the statute of limitations had run, the Kellys' claim was barred by laches and any damages the Kellys sustained from the alleged fraud on New England's part resulted from the Kellys' failure to invoke the grading and authenticity guaranty.

Section III at p. 3, in the second paragraph in the fourth sentence after "... the Kellys contended that....", insert the following:

their claims were not barred by the statute of limitations or laches and

Section III at p. 4, at the end of the first paragraph add the following:

Regarding the issue of laches and the statute of limitations, the district court held that the record was not developed enough to decide these issues as a matter of law.

Section VI at p. 5-6 is vacated and in its place we insert the following:

VI

New England contends that the Kellys' claims are barred by the statute of limitations. The district court found that, although the Kellys had expressed some concern about the coins outside the limitations period, a fact issue remained "as to whether plaintiffs were aware of sufficient facts at that time to constitute constructive notice." We review independently a claim that the statute of limitations has run. Donoghue v. Orange County, 848 F.2d 926, 929 (9th Cir. 1987).

Under Washington's three-year statute of limitations, a cause of action for fraud does not accrue "until the discovery by the aggrieved party of the facts constituting the fraud." Wash.Rev.Code Sec. 4.16.080(4). The Kellys filed their complaint against New England on March 1, 1985. Therefore, if the Kellys discovered their claims prior to March 1, 1982, their claim against New England is time barred.

The district court held that a fact issue remained as to whether the Kellys had constructive notice of their claims prior to March 1, 1982. However, under Washington law, " [a]ctual knowledge of the fraud will be inferred if the aggrieved party by the exercise of due diligence, could have discovered it." Interlake Porsche & Audi, Inc., v. Bucholz, 45 Wash. App. 502, 728 P.2d 597, 607 (1986). If the Kellys had notice sufficient to excite their attention and put them on guard or had notice indicating to them that an inquiry was necessary, they are charged with notice of everything to which such an inquiry might lead. Id. at 607.

The undisputed facts in the record indicate that as a matter of law the Kellys through due diligence should have discovered their claims prior to March 1, 1982. Prior to August 1981, Mr. Kelly sent a letter to New England stating that he "suspected possibly that [his] coins were not as sold." He received no response to this letter so he telephoned New England in August 1981 relaying his suspicions to them. Thereafter, in 1981 and 1982 the Kellys had the coins appraised by the Blanchard Company and discovered that the coin gradings given the coins by New England were not correct. Thus, the undisputed facts indicate the Kellys were suspicious in August 1981, and in fact had some of the coins appraised in 1981. Therefore, the Kellys' claims are barred by the three year statute of limitations.

The Kellys contend that New England lulled them into a "false sense of security" in August 1981 when New England assured them the coins were properly graded. However, confidence in another is not sufficient to excuse lack of due diligence in investigating. In re Sackman's Estate, 34 Wash. 2d 864, 210 P.2d 682, 685-86 (1949). Moreover, the fact that the Kellys contacted an expert to appraise their coins in 1981 after receiving reassurances from New England suggests that they did not rely on New England's reassurances.

We affirm the judgment in favor of de Martinis. We affirm the judgment in favor of New England on the ground that the statute of limitations has run. Because we hold that the statute of limitations has run, we do not address the issue of laches or the merits of the Kellys' claims. Each party will bear its own costs.