Halstead v. City of New York, 1:13-cv-04874

Plaintiffs Dwight Halstead and Block 28-29 Realty owned property at East 94th Street, Brooklyn, which was auctioned by the New York City Sheriff in March 2009.
Plaintiffs sued in state court in 2009 seeking to stay the sale for alleged notice defects; they obtained a stay but failed to serve it timely and the auction proceeded; Halstead bid at the auction and the property was awarded to Madeline Felice.
State court dismissed Plaintiffs’ challenge in June 2009, finding their order to show cause untimely and that participation in the auction waived notice objections; subsequent motions to vacate were denied.
Plaintiffs initiated this Section 1983 federal suit in August 2013 alleging due process violations based on fraudulent affidavits and improper notice, and asserted equitable tolling because they only discovered the alleged fraud in July 2013.
Defendants moved to dismiss under Rule 12(b)(6). The district court considered state-court records and affidavits incorporated into the complaint.
The court dismissed the Amended Complaint as time-barred, holding Plaintiffs were not entitled to equitable tolling because they knew (or should have known) of the alleged defects in 2009 and failed to show diligence or extraordinary circumstances preventing timely suit.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether plaintiffs’ Section 1983 due-process claims are time-barred	Halstead contends the limitations period was tolled by defendants’ fraudulent concealment; he discovered the fraud only in July 2013	Statute of limitations accrued in 2009 when injury and notice occurred; no tolling because plaintiffs knew or should have discovered the alleged fraud then	Claims are time-barred; dismissal granted
Whether equitable tolling/fraudulent concealment applies	Plaintiffs say affidavits fraudulently attested to compliance, preventing earlier discovery	Defendants say plaintiffs had access to the affidavits and state-court proceedings in 2009 and thus lacked diligence	Tolling denied: plaintiffs lacked reasonable diligence and did not show extraordinary circumstances
Whether public-record/state-court rulings may be considered on motion to dismiss	Plaintiffs rely on state-court filings and affidavits as basis for claims	Defendants rely on same records to show accrual and waiver; ask court to consider them	Court took judicial notice/considered incorporated public records for motion to dismiss
Whether participation in auction or state-court decisions preclude relief (res judicata/waiver)	Plaintiffs sought to challenge notice despite prior state actions	Defendants argued preclusion and waiver based on state-court findings and plaintiff’s bidding	Court did not decide preclusion—dismissal rested on statute-of-limitations ground

Ashcroft v. Iqbal, 556 U.S. 662 (legal-conclusion standard for pleadings)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for complaints)
Owens v. Okure, 488 U.S. 235 (state statute of limitations applies to § 1983)
Pinaud v. County of Suffolk, 52 F.3d 1139 (fraudulent concealment and accrual rules in § 1983 claims)
Pearl v. City of Long Beach, 296 F.3d 76 (equitable tolling applies to § 1983 in limited circumstances)
Abbas v. Dixon, 480 F.3d 636 (state tolling rules govern equitable tolling for § 1983)
Bolarinwa v. Williams, 593 F.3d 226 (elements for equitable tolling: diligence and extraordinary circumstances)
Matson v. Bd. of Educ., 631 F.3d 57 (plausible inference standard)
Guilbert v. Gardner, 480 F.3d 140 (objective duty-to-inquire standard for discovery of fraud)
Keating v. Carey, 706 F.2d 377 (fraudulent concealment doctrine)