September 4, 1992
September 4, 1992
No. 91-2317
No. 91-2317
A. GREER EDWARDS, JR.,
A. GREER EDWARDS, JR.,
Plaintiff, Appellant,
Plaintiff, Appellant,
v.
v.
JOHN HANCOCK
JOHN HANCOCK
INSURANCE
INSURANCE
MUTUAL LIFE
MUTUAL LIFE
COMPANY,
COMPANY,
Defendant, Appellee.
Defendant, Appellee.
____________________
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Robert E. Keeton, U.S. District Judge]
[Hon. Robert E. Keeton, U.S. District Judge]
___________________
____________________
____________________
Before
Before
Breyer, Chief Circuit Judge,
Breyer, Chief Circuit Judge,
___________________
Cyr, Circuit Judge,
Cyr, Circuit Judge,
_____________
and Fust ,* District Judge.
and Fust ,* District Judge.
______________
____________________
____________________
Plaintiff A.
Hancock
"Hancock"]
Mutual
to
Life
recover
Insurance
damages
Company
allegedly
[hereinafter
caused
by
an
Count I of the
The
I
I
BACKGROUND
BACKGROUND
__________
review the
order of dismissal
de novo,
__ ____
F.2d
allegations
13, 15
in
(1st
the
Garita
______
F.2d 15, 17
and
accepting
drawing
all well-pleaded
all
reasonable
inferences in
favor of
the plaintiff,
According to
remains the
deeds
of trust
partnership.
on
two Nevada
Farmers Home
ranch
properties owned
Administration later
by
the
extended loans
partnership defaulted on
Hancock, which
The
notices
of
the
foreclosure
gas rights
only
approximately
obligations to
tion,
its loan
sale
in July 1985.
specifically
excluded
interests to
be
bidder,
acquired
$1,232,000.
both
ranch
Freeport-McMoran
properties
Gold
Company
for
had
paying
Hancock
approximately
$1,250,000
to
release
its
interest
in
the ranch
properties,
Farmers
Home
for the
approximating
$600,000.
the ground
foreclosure
rights.
that
statutes
District of Nevada
January 5, 1988,
the
the notices
by
On
to recover
of
excluding
sale violated
the mineral,
the
oil
Nevada
and
gas
Court
on
January 2,
1991, and
promptly
removed
by
District of
Massachusetts.
as
time-barred under
limitations.
the
three-year
Massachusetts statute
of
amend.
breach of contract
DISCUSSION
DISCUSSION
__________
A.
A.
Negligence Claim
Negligence Claim
________________
alleged a
negligence claim
limitations period in
subject to
the three-year
2A, commencing
See
___
in tort
plaintiff
on notice
that it
when
the
has been
event likely
injured).
Nevada federal
court
Nevada law.
to put
The district
happening of
accrued not
Edwards counters
on January 5, 1988,
ruled
the notice
Prior to
of
that time,
the
meaning
of
the
Massachusetts
discovery
rule.
Hendrickson v.Sears, 365 Mass. 83,85, 310 N.E. 2d131, 132 (1974).
___________
_____
A cause
of action
for an inherently
unknowable wrong
the cause of
until the
action, as distinguished
known
to
the
diligence.
injured
Catrone v.
_______
party
in
the
exercise
of
reasonable
Edwards admits
F.2d 881,
that he was
sale "except[ed] therefrom all mineral, oil and gas rights on the
property hereinabove
this guarantee."
is
described, said
rights forming no
part of
quoted language
foreclosure
sale
or
simply
excepted from
the
disclaimer
of
were
would have
action
intended, Edwards
argues, he
had no
cause of
of sale underinclusive.
We cannot agree that
Even
negligence
foreclosure sale.
accrues
when
claim
no
later
than
Under Massachusetts
reasonable
person,
the
law, a
in
the
time
of
cause of
exercise
the
action
of
due
Riley
_____
v.
diligence,
"would
have
discovered
239, 245,
the
damage."
786 (1991);
see
___
also Malapanis v. Shirazi, 21 Mass. App. Ct. 378, 383, 487 N.E.2d
____ _________
_______
533,
537
(1986)
(limitations
period
begins
when
reasonably
192,
ordinarily
199
enough
Massachusetts
plaintiff's
[him]
(1st Cir.
to
law).
1983)
start
"The
the
and the
likely
("notice
statute
controlling
knowledge, actual
cause of
or
likely cause
running")
question
attributed, of
such
harm, was
is
(applying
is whether
both harm
to
sufficient
to
stimulate
cause
of action against a
likely to alert
defendant."
[him] to a
Dryvit System, Inc., 29 Mass. App. Ct. 440, 446, 560 N.E.2d 1290,
___________________
1294 (1990), review den., 409 Mass. 1101, 565 N.E.2d 792 (1991).
______ ____
Edwards does
Moreover,
during the
court action
in
of
Nevada
federal district
Nevada statute as
plainly
was on
a defense to the
Farmers Home
notice of
facts
sufficient to
lead a
1The deeds of trust and the opinion of the Nevada federal distr
court were attached to the complaint. The consideration given th
documents in the court below did not convert the Rule 12(b)(6) mot
6
Without
accrual
of
determination
rendering
cause
that a
of
the
limitations
action
cannot
legal basis
exists for
period
await
nugatory,
a
judicial
the action.
See
___
against insurer,
accrued no
stemming
rather than
from erroneous
of notification of
receipt of notice of
Court decision)
IRS position,
tax deficiency or
(applying Massachusetts
advice,
date of Tax
law); White
_____
v. Peabody
_______
Constr. Co., 386 Mass. 121, 129-30, 434 N.E.2d 1015, 1022 (1982)
____________
(cause
of
action
sustained harm
accrued
when
from leaky
469,
467
certification
N.E.2d
claimants
learned
they
administrative agency
claim accrued
477
(1984)
when real
had
estate
App. Ct.
(negligent
title-
purchasers filed
favor of neighbors).
B.
B.
ground that
reasonable
breach
of contract
claim
was
dismissed on
the
to support
an agreement
with
____________________
into a
Edwards or that the trustees under the deeds of trust were acting
as Hancock's
sale.
agents in
deeds of trust.
by
the
notices of
grantor
or
borrower)
to the
trustee,
title
The
trust are
default and
regulated by
statute.
sale);
the
establishes the
21.130
property"
rights and
to
See id.
___ ___
in a Nevada
sold).
deed of
107.080 (trustee's
107.090 (filing of
(notice of sale
be
107 (deeds of
notice of
must "particularly
The
deed
responsibilities of the
of
trust
parties and
the notices of
and
the
notice of
sale of
of Nevada law,
the foreclosed
be sold.
of mineral, oil
properties "particularly
Nev. Rev.
Stat.
21.130;
see Turner v. Dewco Services, Inc., 87 Nev. 14, 479 P.2d 462, 465
___ ______
____________________
(1971) (intent of statute is
of the
a consequence of
underinclusive
sustained damages as
notices
of
sale,
particularly
the
since Freeport-
McMoran
Gold
Company,
which
"expressed
rights, did
great
not bid at
interest"
the auction
in
sale
Nevada
notice of
deeds
of trust
required
see Nev.
___
Rev.
Stat.
that
the trustee
give
requires
. . . required by law
See infra
___ _____
note 3.
estate
Under Nev.
Rev. Stat.
execution sales,
the notice
of sale
must "particularly
second
amended
under
_____
the
___
direction of
_________ __
complaint,
Hancock,
_______
(Emphasis added.)
will be considered
the agent
agreement
trustee is
beneficiary,
rather
than the
Additionally, as the
of Agency,
of the beneficiary
subject
terms
to
of
the
the
a trustee
under a
control of
agreement.
trust
the
See
___
trustee,
discretion) to appoint
(Second)
beneficiaries
hand,
the Restatement
the
other
specifically excepted
replacement trustees.
if
the
of sale, the
Under
on
a duty of
obedience to his
principal;
the
trust.");
see
___
also
____
104
Nev. 568,
763 P.2d
agent
depends
the
quantum
v.
350, 351
14); Restatement
Whether a trustee is
of
control the
trust
doubtful cases,
on the control
P.2d
principal possesses
at
in fact
351 ("In
the right to
exercised.
an
agency
control the
district
court
trustees
underinclusive
acted
notices
as
dismissed
the
second
14).
amended
Hancock's
agents
sale.
The
of
especially
significant
that
paragraph 8
"describes
in
court
of
that
providing
the
considered
it
the
as the party
1975
deed2
that is to
in the text,
see infra p.
___ _____
is contained in
8 of the 1975 deed of trust. Covenant No. 6 in
1976 deed of trust is similar.
As concerns the notice of sa
Covenant No. 6 provides:
The trustees shall first give notice of the time and place of
such sale, in the manner provided by the laws of this state for
the sale of real property under execution . . . .
Significantly,
court
considered
explicitly
acting under
the[]
of
not appear
the second
the
direction of
rights"
from
Hancock,
the
that the
district
amended complaint,
[mineral]
foreclosure.
15
it does
which
property
to
be
excepted
sold
at
of trust grant
Hancock
less than that required by law for the sale or sales of real prope
________ __ ___ ___ ___ ____ __ _____ __ ____ _____
upon execution") (emphasis added), the statute does not expres
____ _________
place with the trustee the duty or power to prepare the prope
description or to determine its content.
In pertinent part, the Nevada statute governing the manner
giving notice of the time and place of a sale of real property u
execution merely states:
. . . .
(c) in case of real property, by:
(1) Personal service upon
registered mail to the last known
debtor;
(2)
Posting a
similar notice
particularly describing
____________ __________
the property . . . .
___ ________
required
to
property,"
to
deeds of trust
Hancock.
declare
under
a
require that
Nevada law,
default
and
the
to
notice of sale
power
elect
to
to
be
determine
sell
"said
been invited
to no
____________________
4The 1975 deed provides:
would inhibit
the beneficiary's
trustees,
we
must assume
Hancock's
power.5
there
were
no such
the incumbent
limitations
on
power to replace
that Hancock
to direct and
"did direct
and control
Edwards,
as
we must
for
present
purposes,6
we can
only
notices
of
sale
which
did
not
deeds of trust.
Thus, the
Company
particularly
as required
allegations
not only that the trustees did not owe allegiance to the terms of
the deeds of trust,
351 (citing
Restatement
(Second) of
Agency
14;
P.2d at
Restatement
____________________
(Second)
of Trusts
to replace them.
14B
by
of control
the
doubtful
"amount
situations, upon
cised.").
trustees,
In sum,
combined
"specifically
agreed
the amount
Hancock's
with
except[ing]
to
its
the[]
be
exercised" but
of control in
unlimited power
direction
of
[mineral]
fact exer-
to
the
"in
replace the
trustees
rights"
from
in
the
See, e.g.,
___ ____
In re
_____
Lane, 937 F.2d 694, 699 (1st Cir. 1991) (vacating dismissal order
____
agency is vacated
and the case is remanded
for further
_________________________________________________________________
proceedings. The parties shall bear their own costs.
____________________________________________________
14