Court applies "discovery" limitations period in business claim arising from insurance assignment
Morris Associates, Inc., sued Carl Knaack and others, claiming that Knaack wrongfully attempted to assign the proceeds of an insurance policy that belonged to the company that Morris had purchased from Knaack. The Defendants argued that it was too late to sue because the assignment occurred more than six years prior to the filing of the lawsuit. Morris pointed out that it sued within three months of learning of the assignment, thereby making the suit timely undeer a Michigan statute.
The Court of Appeals agreed that MCL 600.5855, which allows two years after the discovery of fraud in which to sue, applied under the circumstances. It pointed out that even if the allegation was one of "silent fraud," given Knaack's fiduciary duty to the corporation which he served as an officer and director, his fraud was actionable, even if it only consisted of a failure to disclose.