734 N.W.2d 827 (2007) 2007 WI 95

JOHN DOE 1, Plaintiff-Appellant-Petitioner,
v.
ARCHDIOCESE OF MILWAUKEE, Defendant-Respondent,
Alias Insurance Company # 1, Defendant.
John Doe 2 and John Doe 3, Plaintiffs-Appellants-Petitioners,
v.
Archdiocese of Milwaukee, Defendant-Respondent.
Charles Linneman, Plaintiff-Appellant-Petitioner,
v.
Archdiocese of Milwaukee, Defendant-Respondent,
Franklyn Becker, Defendant.

No. 2005AP1945.

Supreme Court of Wisconsin.

Argued: April 24, 2007. Decided: July 11, 2007.

*830 For the plaintiffs-appellants-petitioners there were briefs by Jeffrey R. Anderson, St. Paul, MN, Marci A. Hamilton, Washington, PA, and James S. Smith, Brookfield, and oral argument by Marci A. Hamilton.

For the defendant-respondent there was a brief by John A. Rothstein, David P. Muth, and Quarles & Brady LLP, Milwaukee, and oral argument by John A. Rothstein.

An amicus curiae brief was filed by Richard Jasperson and Richard Jasperson P.A., St. Paul, MN, and Matthew A. Biegert and Doar Drill, S.C., New Richmond, on behalf of the Leadership Council on Child Abuse & Interpersonal Violence.

¶ 1 PATIENCE DRAKE ROGGENSACK, J.

This is a review of an unpublished decision of the court of appeals that affirmed the circuit court's order dismissing the complaints of John Doe 1, John Doe 2, John Doe 3, and Charles Linneman against the Archdiocese of Milwaukee (the Archdiocese).^[1] The court of appeals agreed with the circuit court that the claims against the Archdiocese for negligent supervision and fraud relating to the Roman Catholic priests' sexual molestation of children were barred by the statute of limitations. John Doe 1 v. Archdiocese of Milwaukee, No.2005AP1945, 296 Wis.2d 419, 722 N.W.2d 400, unpublished slip op., ¶ 1 (Wis.Ct.App. Aug. 29, 2006) (John Doe 1).

¶ 2 We conclude that the claims asserted against the Archdiocese for negligent supervision are barred by the statute of limitations because according to controlling precedent such claims are derivative and accrued as a matter of law by the time of the last incident of sexual assault. However, we also conclude that the claims of fraud for intentional misrepresentation are independent claims based on the Archdiocese's alleged knowledge of the priests' prior sexual molestation of children and the Archdiocese's intent to deceive children and their families. We further conclude that the date of the accrual of the fraud claims is "when the plaintiffs discovered or, in the exercise of reasonable diligence, should have discovered" that the Archdiocese's alleged fraud was a cause of *831 their injuries. John BBB Doe v. Archdiocese of Milwaukee, 211 Wis.2d 312, 340, 565 N.W.2d 94 (1997) (BBB Doe). This determination cannot be resolved by a motion to dismiss the complaints. Therefore, we affirm the dismissal of the negligent supervision claims; we reverse the dismissal of the fraud claims; and we remand for further proceedings.

I. BACKGROUND^[2]

¶ 3 This review arises from the consolidation of three lawsuits filed against the Archdiocese that was dismissed for failure to state a claim. In 2005, John Doe 1 and John Does 2 and 3 (the Doe plaintiffs), filed complaints that were nearly identical.^[3] The Doe plaintiffs, who are adults, allege that from 1973 to 1976, when they were children, a now-deceased Roman Catholic priest, Siegfried Widera, abused them sexually after he had been criminally convicted of sexually molesting another child and the Archdiocese knew of his conviction. It was after Widera's criminal conviction that the Archdiocese moved Widera from a parish in Port Washington, Wisconsin, to St. Andrew's Parish in Delavan, Wisconsin, where Widera molested the Doe plaintiffs.

¶ 4 The Archdiocese also was informed that Widera sexually molested an altar boy at St. Andrew's Parish and confronted Widera, who admitted he had made "a slip." The Archdiocese's notes made contemporaneously with this assault are attached to the complaint. They reveal that it would "try to keep the lid on the thing, so no police record would be made" and also that it knew the mother of the boy "feared reprisals from Church if she would go to police." Subsequently, in 1976, the Archdiocese transferred Widera to California. The Archdiocese told Widera to tell people in Delavan that he was going on vacation rather than telling the truth. Widera molested numerous boys after his transfer to California.

¶ 5 The Doe plaintiffs claim negligent supervision because the "Defendant Archdiocese knew or should reasonabl[y] have known of Widera's dangerous and exploitative propensities as a child sexual exploiter and/or as an unfit agent and despite such knowledge, Defendant Archdiocese negligently retained and failed to provide reasonable supervision of Widera." The Doe plaintiffs also claim fraud because the Archdiocese "knew that Siegfried Widera had a history of sexually molesting children and that he was a danger to children," but notwithstanding that knowledge, the Archdiocese: (1) affirmatively represented that it "did not know that Siegfried Widera had a history of molesting children" and "did not know that Siegfried Widera was a danger to children"; and (2) failed to disclose its knowledge of Widera's history of sexually molesting children.

¶ 6 The Doe plaintiffs contend they did not discover, nor in the exercise of reasonable diligence should they have discovered, that the Archdiocese negligently supervised Widera or that the Archdiocese knew of Widera's history of sexually abusing children until 2004. It was in 2004 that the Doe plaintiffs allege they discovered that Widera had been convicted of sexually molesting a minor boy prior to Widera's abuse of them. The Doe plaintiffs also contend that they did not discover, nor in *832 the exercise of reasonable diligence should they have discovered, that the Archdiocese's fraud was a cause of their injuries until they learned of Widera's conviction.

¶ 7 In addition, in 2005, Charles Linneman, an adult, filed a complaint alleging that in approximately 1982 another Roman Catholic priest, Franklyn W. Becker, abused him sexually while he was a child.^[4] Becker and Linneman became acquainted while Linneman was an altar boy at St. Joseph Church in Lyons, Wisconsin. Becker was subsequently moved to a parish in Milwaukee, Wisconsin, but continued to maintain contact with Linneman. Linneman was sexually abused in the priest's living quarters when he stayed overnight at one of the Archdiocese's churches in Milwaukee in order to serve as an altar boy the next day.

¶ 8 Similar to the Doe plaintiffs' complaints, Linneman claims that the "Archdiocese knew that Franklyn Becker had a history of sexually molesting children and that he was a danger to children" before he molested Linneman in 1982. Linneman sued the Archdiocese for negligent supervision and fraud.^[5] Linneman also claims he did not know the Archdiocese defrauded him until recently and did not discover, nor in the exercise of reasonable diligence should he have discovered, that the Archdiocese was a cause of his injuries until recently.

¶ 9 The Archdiocese moved to dismiss the Doe plaintiffs' complaints asserting, among other things, that the claims were barred by the applicable statute of limitations. The circuit court agreed that the statute of limitations barred the Doe plaintiffs' claims because the last sexual assault occurred 29 years before they brought suit. Linneman subsequently stipulated to the circuit court that his claims were "substantially identical" to the Doe plaintiffs' claims and had similar statute of limitations problems because his last sexual contact with Becker occurred 23 years before his lawsuit was filed. He agreed to the consolidation and dismissal of his claims, but he preserved his right to appeal.

¶ 10 All the plaintiffs appealed and the court of appeals affirmed the dismissal of the complaints against the Archdiocese, concluding that the claims were barred by the statute of limitations. John Doe 1, No.2005AP1945, unpublished slip op., ¶ 1. The court of appeals concluded that the negligent supervision claims were controlled by BBB Doe, which concluded that victims of non-incestuous sexual assault knew or should have known they were injured when they were assaulted, and therefore, the victims had "a duty to inquire into the injury that result[ed] from [the] tortious activity." John Doe 1, No.2005AP1945, unpublished slip op., ¶¶ 10-11 (quoting BBB Doe, 211 Wis.2d at 340, 565 N.W.2d 94). As such, "the discovery rule did not save the victims' claims against the priests because the statute of limitations began to run no later than the date of the last sexual assault." Id., ¶ 11 (citing BBB Doe, 211 Wis.2d at 344-45, 565 N.W.2d 94; Pritzlaff v. Archdiocese of Milwaukee, 194 Wis.2d 302, 316-17, 533 N.W.2d 780 (1995)).

¶ 11 The court of appeals also concluded that the fraud claims were barred by Wis. Stat. § 893.93(1)(b) (2005-06)^[6] because the *833 statute of limitations began to run when the facts constituting fraud could have been discovered upon diligent inquiry and under BBB Doe, "the appellants are deemed, as a matter of law, to have discovered their injuries no later than the last sexual assault. . . . Accordingly, they had a duty to seek out the cause of their injuries . . . at that time." John Doe 1, No.2005AP1945, unpublished slip op., ¶¶ 13-15. All the plaintiffs petitioned for supreme court review, which we granted.

II. DISCUSSION

A. Standard of Review

¶ 12 We independently review a dismissal for failure to state a claim as a question of law. Kaloti Enters., Inc. v. Kellogg Sales Co., 2005 WI 111, ¶ 10, 283 Wis.2d 555, 699 N.W.2d 205; John Doe 67C v. Archdiocese of Milwaukee, 2005 WI 123, ¶ 19, 284 Wis.2d 307, 700 N.W.2d 180 (John Doe 67C). "A motion to dismiss for failure to state a claim tests the legal sufficiency of the complaint." BBB Doe, 211 Wis.2d at 331, 565 N.W.2d 94. The reviewing court liberally construes the pleadings and accepts the facts as set forth in the complaint, as well as all reasonable inferences from those facts. Kaloti, 283 Wis.2d 555, ¶ 11, 699 N.W.2d 205; Pritzlaff, 194 Wis.2d at 311, 533 N.W.2d 780. However, the court is "not required to assume as true legal conclusions pled by the plaintiffs." BBB Doe, 211 Wis.2d at 331, 565 N.W.2d 94. "Dismissal of a claim is improper if there are any conditions under which the plaintiffs could recover." Id.

¶ 13 In order to decide whether we should grant the Archdiocese's motion to dismiss, we must determine whether the plaintiffs' claims for negligent supervision and fraud are barred by the applicable statute of limitations. As such, we must determine "when the plaintiffs discovered or, in the exercise of reasonable diligence, should have discovered that they were injured, and the cause of their injury." Id. at 340, 565 N.W.2d 94. Reasonable diligence is ordinarily a question of fact for the fact-finder. Id. at 341, 565 N.W.2d 94. "However, when the facts and reasonable inferences that can be drawn from them are undisputed, whether a plaintiff has exercised reasonable diligence in discovering his or her cause of action is a question of law. In addition, whether an inference is reasonable is a question of law." Id. (citations omitted).^[7]

¶ 14 In our analysis of this case, we may consider whether the complaints state claims for fraud due to the failure to disclose, which turns on whether the Archdiocese had a duty to disclose the history of the priests' sexual abuse. "Whether a duty exists is also a question of law that we review independently. . . ." Kaloti, 283 Wis.2d 555, ¶ 10, 699 N.W.2d 205.

B. Motion to Dismiss

¶ 15 "A threshold question when reviewing a complaint is whether the complaint has been timely filed, because an otherwise sufficient claim will be dismissed if that claim is time barred." Pritzlaff, 194 Wis.2d at 312, 533 N.W.2d 780. In general, the controlling statutory limitation period is the one in effect when the claim for relief accrued. Betthauser v. Med. Protective *834 Co., 172 Wis.2d 141, 493 N.W.2d 40 (1992). Substantive "legislation is presumptively prospective unless the statutory language clearly [indicates] an intent that the statute applies retroactively." Id. at 147, 493 N.W.2d 40 (quoting United States Fire Ins. Co. v. E.D. Wesley Co., 105 Wis.2d 305, 319, 313 N.W.2d 833 (1982)). However, if "a statute is procedural or remedial, rather than substantive, the statute is generally given retroactive application." Id. Statutes of limitations are generally viewed as substantive because they can extinguish otherwise valid claims, and therefore, the statute of limitations that applies is the one in effect when the claim for relief accrued.^[8]Id. at 149, 493 N.W.2d 40.

1. Negligent supervision

¶ 16 A claim for negligent supervision of an employee requires a plaintiff to plead and prove all of the following: (1) the employer had a duty of care owed to the plaintiff; (2) the employer breached its duty; (3) a wrongful act or omission of an employee was a cause-in-fact of the plaintiff's injury; and (4) an act or omission of the employer was a cause-in-fact of the wrongful act of the employee. John Doe 67C, 284 Wis.2d 307, ¶ 43, 700 N.W.2d 180 (citations omitted).

¶ 17 In the case before us, the last sexual assault of the Doe plaintiffs occurred no later than 1976. Therefore, if their claim for negligent supervision accrued then, the statute of limitations would be three years from that date in 1976. Wis. Stat. § 893.205(1) (1975-76). However, because all of the Doe plaintiffs were less than 18 years of age at the time their claims for relief accrued, the statute of limitations would have been tolled for one year after each Doe claimant reached the age of 18. Wis. Stat. § 893.33(1) (1975-76).

¶ 18 In 1979, ch. 893 was repealed and recreated in its entirety and Wis. Stat. § 893.33 was revamped and renumbered as Wis. Stat. § 893.16. § 28, ch. 323, Laws of 1979. Therefore, if the claim for negligent supervision accrued in 1982, when Linneman alleges he was last assaulted by Becker, the statute of limitations would still be three years, Wis. Stat. § 893.54(1) (1981-82), but it would be tolled for two years after Linneman reached the age of 18. Wis. Stat. § 893.16.^[9] The current statute of limitations for negligence is still three years from the date when the claim accrued. § 893.54(1). Therefore, unless the claims for negligent supervision accrued within three years of when the complaints were filed in 2005, they are barred. Accordingly, we must determine when the claims accrued.

¶ 19 Similar to this case, in BBB Doe, all the plaintiffs' claims against the Archdiocese included a claim for negligence in the training, placement and supervision of priests who allegedly sexually assaulted them while they were minors. BBB Doe, 211 Wis.2d at 324, 565 N.W.2d 94. In determining when the claims accrued, we first reviewed the policy considerations underlying the statute of limitations and noted:

*835 On the one hand, we are concerned with allowing tort victims a fair opportunity to enforce legitimate claims against wrongdoers. On the other hand, we are concerned with protecting defendants from having to defend against stale claims, where so much time has passed between the allegedly tortious act and the filing of the claim that witnesses and relevant evidence may be unavailable.

Id. at 334, 565 N.W.2d 94.

¶ 20 With these policy considerations in mind, we reviewed the development of the discovery rule in Wisconsin. Id. at 334-38, 565 N.W.2d 94. We noted that the discovery rule was first adopted in Hansen v. A.H. Robins, Inc., 113 Wis.2d 550, 560, 335 N.W.2d 578 (1983). There we held that "all tort actions other than those already governed by a legislatively created discovery rule . . . accrue on the date the injury is discovered or with reasonable diligence should [have been] discovered, whichever occurs first." Id. After Hansen, we decided that the discovery rule also applied to discovery of the cause of the injury. BBB Doe, 211 Wis.2d at 335, 565 N.W.2d 94 (citing Borello v. U.S. Oil Co., 130 Wis.2d 397, 411, 388 N.W.2d 140 (1986)).

¶ 21 In BBB Doe, we reviewed opinions in which the discovery rule was applied to negligence allegations arising from sexual assault. Id. at 335-38, 565 N.W.2d 94 (citing Hammer v. Hammer, 142 Wis.2d 257, 267, 418 N.W.2d 23 (Ct.App.1987);^[10]Pritzlaff, 194 Wis.2d at 319, 533 N.W.2d 780). In Pritzlaff, the plaintiff alleged that she was coerced into sexual relations with a priest and filed claims against the priest and also against the Archdiocese for negligent hiring, retaining, training and supervision. Pritzlaff, 194 Wis.2d at 306-07, 533 N.W.2d 780. Twenty-seven years had passed since the end of the alleged relationship between the plaintiff and the priest, and therefore, one of the issues was whether the statute of limitations had been tolled during that time. Id. at 312, 533 N.W.2d 780. We explained that the discovery rule "tolls the statute of limitations until the plaintiff discovers or with reasonable diligence should have discovered that he or she has suffered actual damage due to wrongs committed by a particular, identified person." Id. at 315-16, 533 N.W.2d 780 (citations omitted). Since Pritzlaff knew both the identity of the tortfeasor and the injurious conduct, we determined that she could have alleged her complete cause of action by the time the relationship ended, and therefore, the claims were time barred. Id. at 316-17, 533 N.W.2d 780.

¶ 22 In BBB Doe, one or more of the plaintiffs alleged claims against the Archdiocese "for negligent training, placement, and supervision of the priest, liability under the doctrine of apparent authority, and for breach of duty under Wis. Stat. § 48.981 [(1995-96)] to report abuse and mitigate harm." BBB Doe, 211 Wis.2d at 322, 565 N.W.2d 94. During our review, we explained a plaintiff's duty to conduct due diligence under the discovery rule:

Plaintiffs have a duty to inquire into the injury that results from tortious activity. The measure of diligence required of a plaintiff to discover the elements of his or her cause of action is such diligence as the great majority of persons would use in the same or similar circumstances. Plaintiffs may not ignore means of information reasonably available to them, but must in good faith apply their attention to those particulars which may be inferred to be within their reach. . . . If the plaintiff has information providing the basis for an objective *836 belief as to his or her injury and its cause, he or she has discovered the injury and its cause.

Id. at 340-41, 565 N.W.2d 94 (citations omitted). Applying the discovery rule in that case, we concluded as a matter of law that each of the five "plaintiffs discovered or, in the exercise of reasonable diligence, should have discovered" their injury and the cause thereof at least by the time of the last incident of assault. Id. at 342, 565 N.W.2d 94. We noted that "[a]s we recognized in Pritzlaff, actionable injury flows immediately from a nonconsensual, intentional sexual touching. While the plaintiffs may not have known the extent of their injuries at the time of the sexual assaults, in Wisconsin accrual of an action is not dependent upon knowing the full extent of one's injuries." Id. at 343-44, 565 N.W.2d 94 (citing Pritzlaff, 194 Wis.2d at 317, 533 N.W.2d 780). Accordingly, we decided "as a matter of law that the claims of these plaintiffs accrued by the time of the last incident of sexual assault." Id. at 346, 565 N.W.2d 94.

¶ 23 We concluded that the plaintiffs' claims "accrued by the time of the last incident of sexual assault," id., even though the plaintiffs claimed that they repressed their memories of the sexual abuse. Because their recollections were delayed, they were unable to discover the identity of the abuser and the fact of the abuse until their memory had returned. Id. at 357, 565 N.W.2d 94. We reasoned that:

[I]t would be contrary to public policy, and would defeat the purposes of limitations statutes, to allow claims of repressed memory to invoke the discovery rule and to indefinitely toll the statutory limitations for these plaintiffs. We hold that a claim of repressed memory of past sexual abuse does not delay the accrual of a cause of action for non-incestuous sexual assault, regardless of the victim's minority and the position of trust occupied by the alleged perpetrator.

Id. at 364, 565 N.W.2d 94.

¶ 24 While our discussion in BBB Doe focused on the direct claims against the priests, we extended our analysis to the claims of negligent supervision against the Archdiocese, which we held were derivative claims.^[11] We explained that we were not addressing the statute of limitations relative to the plaintiffs' claims based on negligent employment theories because "[p]laintiffs' derivative causes of action against the Archdiocese and the churches accrued at the same time that the underlying intentional tort claims accrued, and similarly would be barred by the statute of limitations." Id. at 366, 565 N.W.2d 94 (citing Pritzlaff, 194 Wis.2d at 312, 533 N.W.2d 780).

*837 ¶ 25 We note that in Pritzlaff we decided that the discovery rule did not save the plaintiff's claims against the priest and that the claim for negligent supervision accrued against the Archdiocese on the same date as those against the priest. Pritzlaff, 194 Wis.2d at 312, 533 N.W.2d 780. At the time of our decision in Pritzlaff, we assumed, without deciding, that a claim for negligent hiring, training and supervision existed in Wisconsin. Id. at 325-26, 533 N.W.2d 780. We looked to opinions from other jurisdictions for the elements of such a claim. Id. at 326, 533 N.W.2d 780. We reasoned that if such a claim existed in Wisconsin, Pritzlaff would have to prove that the Archdiocese was negligent in hiring or retaining the priest because he was unfit for the role of a priest. Id. We explained that the First Amendment of the United States Constitution prevents Wisconsin courts from determining what makes a person competent to serve as a Catholic priest. Id. Therefore, we concluded that even if the plaintiff's negligent supervision claims were not time-barred, the claims were prohibited by the First Amendment to the United States Constitution. Id.

¶ 26 In BBB Doe, we relied on Pritzlaff for its discussion of the discovery rule as applied to claims of sexual assault. BBB Doe, 211 Wis.2d at 336-38, 565 N.W.2d 94. We then concluded that because the negligent supervision claims were derivative of the claims against the priests for sexual assault, they were also barred by the statute of limitations. Id. at 366, 565 N.W.2d 94.

¶ 27 In L.L.N. v. Clauder, 209 Wis.2d 674, 563 N.W.2d 434 (1997), we also addressed a claim for negligent supervision of a priest that was brought against the Diocese of Madison. We assumed that a claim for negligent supervision existed in Wisconsin, as we did in Pritzlaff. Id. at 685, 563 N.W.2d 434. However, we refused to reach that claim because we concluded that the case involved sexual contact between two consenting adults, and therefore, a priest's vow of celibacy could be involved. Id. at 695-96, 563 N.W.2d 434. We reasoned that a civil court "has no authority to determine or enforce standards of religious conduct and duty" and held that the First Amendment precluded L.L.N.'s claim for negligent supervision. Id. at 696, 563 N.W.2d 434.

¶ 28 In the case before us, we do not address whether the First Amendment prohibits the negligent supervision or fraud claims because the issue was not brought to us. The Archdiocese explicitly stated in its brief that "there are no First Amendment grounds or issues presented on this record or appeal." The Archdiocese maintained the same position when questioned about First Amendment defenses during oral argument