WI Supreme Court rules breach of fiduciary duty is intentional tort.

Byline: David Ziemer

Breach of fiduciary duty is an intentional tort, the Wisconsin Supreme Court held on June 20.

As a result, the two-year statute of limitations in sec. 893.57, applicable to intentional torts "to the person," governs such claims.

Perry Printing was a wholly owned subsidiary of Journal Communications, Inc. Since 1937, 90 percent of Journal Communi-cations' stock has been held in the Journal Employees Stock Trust (Trust). Administration of that Trust is governed by the Journal Employees' Stock Trust Agreement (JESTA).

Employees of Perry were eligible to own units of the Trust. The JESTA required employees who owned trust-units and whose employment terminated for any reason other than retirement to immediately offer their units for sale.

When an employee retired, however, the employee was permitted to offer his units for sale over a period of 10 years. This option has a significant benefit, because the trust-units have always appreciated in value.

In 1995, Journal Communications sold Perry's assets. The sale agreement required the buyer to continue to operate the business and to offer comparable employment and compensation to all Perry employees. When the sale closed, all employees were terminated by Perry and rehired by the buyer of Perry's assets.

Because their employment with Journal Communications terminated when Perry was sold, the trustees told the former employees they had to offer to sell back their trust-units immediately, and gave them one to five years to sell their units.

In April 2000, former Perry employees who had sold their units at the time of the restructuring filed a class action against Journal Communications, the trust, and its trustees. The complaint alleged that the plaintiffs were entitled under the JESTA to be treated as retirees with the right to sell their trust-units over a 10-year period, but that the trustees denied them this right, in violation of their fiduciary duty.

Jefferson County Circuit Court Judge John Ullsvik granted partial summary judgment to the defendants, allowing only the fiduciary duty claims of those who were eligible to retire at the time of the sale to go forward. The court rejected the defendants' argument that the two-year statute of limitations barred those claims as well, finding that the complaint alleged negligent, rather than intentional, breach of fiduciary duty, and applying a six-year statute of limitations.

Defendants appealed, and the court of appeals reversed...