## Facts

- In 1986, an auction house sold the Krahmers a painting attributed to Frank Weston Benson for $38,500.
- The catalogue’s provenance description was removed before the sale, but after the purchase the seller provided a nameplate stating the work belonged to the Detroit Club of Michigan and represented that the club bought it directly from Benson.
- The sale included a six-year authenticity warranty that expired in 1992.
- In 1990, the seller issued an updated appraisal reaffirming authenticity and valuing the work at $85,000.
- In the late 1990s, the Krahmers researched the painting and, in 1999, contacted the Benson catalogue raisonné committee seeking recognition of the work as authentic.
- In 2002, while attempting to sell the painting through another auction house, a restorer raised authenticity concerns; the Krahmers first suspected the work might be inauthentic.
- In 2003, the committee concluded the painting was not authentic.
- In 2004, the Krahmers sued in the Delaware Court of Chancery seeking rescission based on fraud.
- After discovery, the Krahmers moved to amend to add claims for mutual mistake, negligent misrepresentation, and constructive fraud; the seller argued the claims were time-barred and futile.

## Issues

1. Whether the proposed new claims were barred by Delaware’s three-year statute of limitations, and whether tolling doctrines (fraudulent concealment, inherently unknowable injury, or equitable tolling) delayed accrual past inquiry notice.
2. Whether amendment was futile because the proposed claims, accepted as true, failed to state a claim under a Rule 12(b)(6)-type standard.

## Decision

- The Court of Chancery denied leave to amend.
- The court held the proposed claims for mutual mistake, negligent misrepresentation, and constructive fraud were barred by the three-year limitations period in 10 Del. C. § 8106.
- The court further held the negligent misrepresentation claim was independently futile because the pleaded facts did not state a viable negligent misrepresentation theory under Delaware law.
- The Delaware Supreme Court declined interlocutory review of the denial of amendment.

## Legal Principles

- Leave to amend under Court of Chancery Rule 15(a) is discretionary and may be denied when amendment would be futile.
- Amendment is futile if, assuming the truth of the proposed allegations, it appears with reasonable certainty the plaintiff could not obtain relief under any reasonably conceivable set of facts (a Rule 12(b)(6)-type analysis).
- Claims for fraud, misrepresentation, and similar tort theories are generally subject to Delaware’s three-year limitations period (10 Del. C. § 8106), accruing at the time of injury absent tolling.
- Tolling doctrines (fraudulent concealment, inherently unknowable injury, equitable tolling) apply only when relevant facts are so hidden that a reasonable plaintiff could not discover them; limitations begins upon discovery or inquiry notice.
- Under Delaware law, negligent misrepresentation liability is limited and generally requires an appropriate duty arising from a qualifying relationship or a defendant in the business of supplying information for others’ business guidance; allegations insufficient on duty and justifiable reliance fail to state a claim.

## Conclusion

The court refused to allow new theories after the case was underway because the proposed claims were untimely under Delaware’s three-year statute of limitations and, in any event, the negligent misrepresentation allegations did not plead a legally cognizable basis for relief.


Krahmer v. Christie’s Inc., 903 A.2d 773 (Del. Ch. 2006)