March 21, 2014
Authored by: Luke Lantta
If a deed has been procured by fraud, it may take a while for the defrauded person to figure out that he or she has been duped. That’s why, in certain circumstances, the statute of limitations to set aside a fraudulent deed may be tolled. But a mere allegation that a deed has been procured by fraud isn’t enough to toll the statute of limitations. The allegedly defrauded person usually can’t just blindly accept someone else’s purportedly fraudulent representations. Then again, the situation may be different if a fiduciary is the alleged fraudster or if there is a confidential relationship between the parties. In McCall v. Williams, the Georgia Court of Appeals explored the intersection between alleged fraud, the duty to exercise reasonable diligence to detect such fraud, the role a fiduciary or confidential relationship plays in a fraud action, and the statute of limitations to set aside a deed based on fraud.
Elizabeth McCall and her four siblings executed a deed in 1994 conveying certain family land to their brother, Robert Williams. Williams died in 2005, and, in 2011, McCall and others filed a petition against Williams’ widow and children seeking to set aside the deed based on fraud. In the petition, the plaintiffs claimed that Williams told them the document was an easement; they were provided the signature pages; and they signed the document without knowing it was a deed because they trusted and relied on their brother. The defendants moved to dismiss the petition based on Georgia’s seven year statute of limitations, which provides that an action to set aside or cancel an allegedly fraudulent deed must be brought within seven years from when the fraud became known. The trial court ruled that the action was time-barred, and the Georgia Court of Appeals agreed.
Exercise of Reasonable Diligence
If a party, by reasonable diligence, could have had knowledge of the truth, a court sitting in equity will not grant the relief requested. The plaintiffs claimed that they didn’t read the document, but, if they had, presumably they would have uncovered the truth. Under Georgia law, one who can read must read, or show a legal excuse for not doing so. Fraud that will relieve a party who can read from the duty to read must have prevented the party from reading the document. The plaintiffs here could read and therefore, through reasonable diligence, could have known the truth of the deed simply by reading it.
Fiduciary Relationship/Confidential Relationship
The allegation that Williams made fraudulent statements to the plaintiffs did not relieve them of their duty to read the deed before signing. Had Williams been in a fiduciary or confidential relationship with the plaintiffs, the result may have been different. If there was such a relationship, the plaintiffs might have been able to justifiably rely on Williams’ statements. The mere fact that Williams was related to the plaintiffs did not create a confidential or fiduciary relationship because “mere kinship of blood does not create such a relation.” Likewise, the relationship between Williams and the plaintiffs was not one in which the plaintiffs reposed trust in Williams. The evidence showed that McCall’s relationship with Williams was “rocky” and another plaintiff testified that Williams was “never around that much.” Therefore, no confidential or fiduciary relationship existed which may have tolled the statute of limitations.