Massa, J.
The City of Marion sued London Witte Group, LLC, an advisor to the City’s former mayor, Wayne Seybold. The new City administration alleged corruption in the old, aided and abetted by London Witte. London Witte moved for summary judgment based on the statute of limitations. The City argued the doctrine of adverse domination tolled the statute of limitations until Mayor Seybold left office. The trial court granted partial summary judgment for London Witte. An appellate panel found all the City’s claims were time-barred.
We now adopt and apply the adverse domination doctrine. And we conclude summary judgment was inappropriate for all the City’s claims because there are genuine issues of material fact as to whether Mayor Seybold adversely dominated the City, and whether London Witte helped him do so. Therefore, we reverse in part, affirm in part, and remand.
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The City urges this Court to adopt the equitable tolling doctrine of adverse domination, which would toll the statute of limitations until Mayor Seybold left office. Because the doctrine, which has been significantly developed over time in other jurisdictions, is a logical corollary of our discovery rule, we now adopt it. Applying the doctrine here, we conclude summary judgment was inappropriate because there is a genuine issue of material fact as to whether Mayor Seybold dominated the City of Marion while serving as mayor, and whether London Witte helped him do so. London Witte has not met our heightened standard of affirmatively negating the City’s claims. Because the adverse domination doctrine is dispositive, we decline to reach the City’s other arguments.
I. We adopt the equitable tolling doctrine of adverse domination as a logical corollary of Indiana’s discovery rule.
Under the discovery rule, the statute of limitations does not begin to run until the plaintiff knows, or in the exercise of ordinary diligence could have discovered, that it has been injured from tortious conduct…
“Adverse domination is an equitable doctrine that tolls statutes of limitations for claims by corporations against its officers, directors, lawyers and accountants for so long as the corporation is controlled by those acting against its interests.”…
The doctrine has been described as a “corollary” of the discovery rule. Farmer, 865 F. Supp. at 1154 n.11. “Generally, a corporation ‘knows,’ or ‘discovers,’ what its officers and directors know.” Clark, 452 S.E.2d at 718. “But when officers and directors act against the interests of the corporation, their knowledge, like that of any agent acting adversely to his principal, is not imputed to the corporation.” Id.; see also Am. Heritage Banco, Inc. v. McNaughton, 879 N.E.2d 1110, 1116 (Ind. Ct. App. 2008) (exception to the general rule of imputed knowledge when an agent acts adversely to the principal). A corporate plaintiff cannot “have ‘knowledge’ of an injury to itself until those individuals who control it know of the injury and are willing to act on that knowledge.” Farmer, 865 F. Supp. at 1155 (emphasis added). In other words, where an “entity is dominated by those whose own malfeasance might be revealed in the course of litigating a complaint, it follows the entity has not ‘discovered’ the injury to its interests in any meaningful way.” Resol. Tr. Corp., 840 F. Supp. at 1284. The doctrine is based “on the theory that it is impossible for the corporation to bring the action while it is controlled, or ‘dominated,’ by culpable officers and directors.” Smith, 980 P.2d at 144. Wrongdoing officers and directors “cannot be expected to sue themselves or to initiate any action contrary to their own interests.” Id. Thus, the statute of limitations is tolled as long as a corporate plaintiff is controlled by the alleged wrongdoers. Id.
a. Intentional wrongdoing of some kind must be alleged for the doctrine to apply.
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We find the second approach “best reflects the fundamental concerns that adverse domination was designed to address.” Id. “The doctrine is founded on the presumption that those who engage in fraudulent activity likely will make it difficult for others to discover their misconduct.”… We therefore hold that intentional wrongdoing of some kind is required for the doctrine to apply.
b. The adverse domination doctrine applies to both private and municipal corporations.
….The rationale behind the doctrine appears to apply equally to private and municipal corporations. Whether an entity is adversely dominated by board members or a mayor, the effect is the same: the entity cannot discover its injuries nor sue to redress them.
c. The doctrine also applies to co-conspirators of the controlling wrongdoers.
Finally, we must address the applicability of the doctrine to “outside” defendants, that is, defendants who do not directly control a corporation. It is well established that the doctrine also applies to causes of action against co-conspirators of the wrongdoers who adversely dominate the entity…
The rationale behind the adverse domination doctrine “applies equally to causes of action against co-conspirators.” Larney, 719 N.E.2d at 172. Just as a board comprised of wrongdoers could not be expected to file suit against itself, “such a board could not be expected to file suit against a non-board-member co-conspirator because such action would necessarily bring to light its own wrongdoing and would be adverse to its own interests.” Id. Tolling is warranted because controlling wrongdoers are “unlikely to initiate actions or investigations for fear that such actions will reveal their own wrongdoing.” Gardner, 798 F. Supp. at 795. While a formal claim of conspiracy is not necessary, at the motion to dismiss stage, “a plaintiff’s allegations must establish that the defendant was complicit in the wrongdoing of the directors.” Indep. Tr. Corp., 665 F.3d at 937. And at trial, the plaintiff must prove complicity by a preponderance of the evidence, in order for the doctrine to fairly be applied against outside defendants.
II. Summary judgment was inappropriate because there are genuine issues of material fact as to whether Mayor Seybold adversely dominated the City, and whether London Witte contributed to it.
Although London Witte met its prima facie burden for a statute of limitations defense on summary judgment, we conclude that after the burden shifted, the City established facts to avoid the defense. McMahan, 478 N.E.2d at 120. Construing all reasonable inferences in favor of the City, we find that summary judgment was inappropriate because genuine issues of material fact remain as to whether Mayor Seybold adversely dominated the City, and whether London Witte was complicit.
a. London Witte met its prima facie burden of showing the City’s claims were untimely.
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b. The City established facts to avoid the statute of limitations defense and created genuine issues of material fact as to whether Mayor Seybold adversely dominated the City, and whether London Witte helped him do so.
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III. At trial, the City will have to prove that Mayor Seybold adversely dominated the City, and that London Witte was complicit.
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The adverse domination doctrine extends the discovery rule to situations in which a corporation is prevented from discovering a cause of action because “there is no one who has the knowledge, ability, and motivation to act for the corporation.” Larney, 19 N.E.2d at 173 (citing Hecht v. Resol. Tr. Corp., 635 A.2d 394, 408 (Md. Ct. App. 1994)). Thus, “the ability to act on knowledge of the wrong is as important as the knowledge itself.” Id. We are unpersuaded that a city council member or Director of Development could sue on behalf of a city. A City Attorney, of course, can bring suit on behalf of a city. An affirmative showing of domination would require a city to show that its mayor was exercising its ability to supervise and control the City Attorney, and others who could investigate the mayor’s own wrongdoing. To this end, the designated evidence of the failed KPMG investigation satisfies the City’s required showing of affirmative domination on summary judgment. That is, the reasonable inference would be that Mayor Seybold would not let an investigation into the bond funds be successful, which creates a genuine issue of material fact as to whether he would have allowed a suit to be filed.
Conclusion
Summary judgment on all counts is inappropriate as the City established facts in avoidance of the statute of limitations defense at this stage. There are genuine issues of material fact as to whether Mayor Seybold could have been expected to redress the City’s injuries by filing suit over the project during his administration, and whether London Witte was complicit in his alleged wrongdoing. The judgment of the trial court is reversed in part, affirmed in part, and remanded for further proceedings consistent with this opinion.
Rush, C.J., and David, Slaughter, and Goff, JJ., concur.