Simmons v. Reich, 20-4114

Background

Plaintiffs are Black homeowners who allege lenders ran a long‑running predatory mortgage scheme: usurious interest rates, concealed interest/principal, excessive fees, under‑the‑table cash payments, and wrongful foreclosures.
Loan closings occurred between 2003 and 2010; plaintiffs claim they were unaware of the full extent of the scheme and filed suit on June 4, 2019 in the Eastern District of New York.
Complaint asserted RICO claims (18 U.S.C. §§ 1962(c), (d)), federal civil‑rights claims (42 U.S.C. §§ 1981, 1983, 1985), constitutional and state‑law claims; district court declined supplemental jurisdiction over state claims.
District court dismissed all federal claims on November 20, 2020, holding RICO claims time‑barred and civil‑rights claims insufficiently pleaded; plaintiffs appealed.
Key factual admissions in the complaint: plaintiffs paid cash incentives (~10% of principal) at closing, were presented an unexpected broker rider (Advent Funding), and did not receive full loan principal at closing (leaving 60–65% of principal "on paper").

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
When RICO accrues / statute of limitations start	Accrual did not occur at closing because plaintiffs were misled and lacked notice of injury	Accrual occurred at closing (latest 2010); plaintiffs were on inquiry notice then	Accrual at closing; RICO suits time‑barred (4‑yr limit)
Fraudulent concealment / equitable tolling of RICO SOL	Tolling applies because lenders concealed scheme and plaintiffs lacked access to information	Tolling unavailable because plaintiffs had "storm warnings" and failed to exercise due diligence	Tolling denied—duty to inquire arose at closing; no due diligence alleged
Separate accrual for later acts (new injuries)	Foreclosures, eviction threats, and ongoing payments were new, independent injuries restarting SOL	Later events were derivative of the original fraudulent loans, not new independent injuries	Later acts were derivative; separate accrual rule does not apply
Civil‑rights claims plausibility (§§ 1981, 1983, 1985, constitutional)	Lenders targeted Black borrowers for worse terms (14–24% vs. 10–12% for others)	Allegations are conclusory and lack factual comparator/evidence of discriminatory intent	Claims dismissed for failure to plead plausible discrimination

Key Cases Cited

Muto v. CBS Corp., 668 F.3d 53 (2d Cir. 2012) (standard for reviewing Rule 12(b)(6) dismissal).
Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67 (2d Cir. 1998) (affirmative SOL defense may be resolved on Rule 12(b)(6) if apparent on face of complaint).
Whiteside v. Hover‑Davis, Inc., 995 F.3d 315 (2d Cir. 2021) (plaintiff bears burden to plead exceptions to limitations).
Thea v. Kleinhandler, 807 F.3d 492 (2d Cir. 2015) (plaintiff must plead elements of tolling to survive dismissal).
Zerilli‑Edelglass v. N.Y.C. Transit Auth., 333 F.3d 74 (2d Cir. 2003) (abuse‑of‑discretion review for denial of equitable tolling).
Rotella v. Wood, 528 U.S. 549 (2000) (RICO claims governed by four‑year SOL).
Koch v. Christie’s Int’l PLC, 699 F.3d 141 (2d Cir. 2012) (accrual and discovery rules for RICO; storm‑warning/inquiry notice doctrine).
In re Merrill Lynch Ltd. P’ships Litig., 154 F.3d 56 (2d Cir. 1998) (storm warnings and the limits of fraudulent‑concealment tolling).
Lentell v. Merrill Lynch & Co., Inc., 396 F.3d 161 (2d Cir. 2005) (storm warnings trigger duty to investigate).
Gold v. Deutsche Aktiengesellschaft, 365 F.3d 144 (2d Cir. 2004) (signing a contract presumes knowledge of its terms absent wrongful act).
Corcoran v. N.Y. Power Auth., 202 F.3d 530 (2d Cir. 1999) (elements for fraudulent‑concealment tolling).
Bankers Trust Co. v. Rhoades, 859 F.2d 1096 (2d Cir. 1988) (separate‑accrual rule for new and independent injuries).
Griffin v. McNiff, 996 F.2d 303 (2d Cir. 1993) (reasonable diligence required for equitable tolling).
Hu v. City of New York, 927 F.3d 81 (2d Cir. 2019) (plaintiff must plausibly allege comparator similarity; courts need not accept legal conclusions).
Mian v. Donaldson, Lufkin & Jenrette Sec. Corp., 7 F.3d 1085 (2d Cir. 1993) (conclusory allegations insufficient to state civil‑rights claim).