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Keywords

plaintiffdefendantdiscoverystatuteappealsummary judgmentstatute of limitationsappellant
plaintiffstatuteappealstatute of limitationsappellant

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Mathews v. Kidder, Peabody & Co., Inc., 260 F.3d 239, RICO Bus.Disp.Guide 10,132

Facts

The Appellants, conservative first-time investors, purchased securities from Kidder Peabody & Co., Inc. and the Henry S. Miller Organization, which they claimed were fraudulently misrepresented as low-risk investments. After the securities failed, they brought civil RICO claims against the companies. The District Court granted summary judgment to the defendants, ruling that the claims were barred by the four-year statute of limitations, as the Appellants were on inquiry notice of their injuries by early 1990.

The Appellants in this case are a number of self-professed conservative, first-time investors who purchased securities from Kidder Peabody & Co., Inc. and the Henry S. Miller Organization. They claim that Kidder and Miller fraudulently misrepresented the securities as low-risk vehicles similar to municipal bonds.

Issue

Whether the Appellants' claims were barred by the statute of limitations and whether the fraudulent concealment doctrine applied.

The Court of Appeals, Nygaard, Circuit Judge, held that: (1) investors were on inquiry notice of their claim more than four years before suit was commenced, and (2) fraudulent concealment doctrine did not apply.

Rule

The statute of limitations for civil RICO claims is four years, and a claim accrues when the plaintiff knows or should have known of their injury.

It is now well settled that RICO actions enjoy a four-year limitations period; the question of accrual, however, remains a source of controversy.

Analysis

The court applied the 'injury discovery and pattern rule,' determining that the Appellants' claims accrued no later than May 1986 when all elements of a RICO claim were in place. The court found that the Appellants should have been aware of their injury by February 1990, thus barring their claims as they did not file until 1995. The court also rejected the argument for equitable tolling, stating that the Appellants did not exercise reasonable diligence.

The court held that 'all the elements of Plaintiffs' RICO claim and their injury were in place no later than May 1986.' The court reviewed the mix of information available to the Appellants and concluded that they should have been aware of their injury 'no later than February 1990.'

Conclusion

The Court of Appeals affirmed the District Court's decision, concluding that the Appellants' claims were barred by the four-year statute of limitations.

The court held that Mathews' claims were barred by the applicable four-year statute of limitations.

Who won?

Kidder Peabody & Co., Inc. and the Henry S. Miller Organization prevailed because the court found that the Appellants were on inquiry notice of their claims more than four years before filing suit.

Kidder and Miller prevailed because the court concluded that the Appellants were on inquiry notice of their claims more than four years before suit was commenced.

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