Case Information
*1 Before FAGG, BOWMAN, HANSEN, Circuit Judges.
___________
BOWMAN, Circuit Judge.
This is one of several cases spawned by the failure of Commonwealth Savings Company (Commonwealth), a state-chartered industrial loan and investment company located in Lincoln, Nebraska. The issue presented in this appeal is whether the District Court erred when it held that [1]
appellant's Racketeer Influence and Corrupt Organization (RICO) claim, 18 U.S.C. §§ 1961-1968 (1988), is barred by the statute of limitations. We affirm the judgment of the District Court.
The appellant, Association of Commonwealth Claimants (ACC), is an unincorporated association representing creditors and depositors of the failed industrial thrift. ACC is the assignee of the receiver of Commonwealth. Appellees are the executive director and former members of the board of directors of the Nebrаska Depository Institution Guaranty Corporation (NDIGC), the financial institutions that employed those directors, and the corporate owners of those employers. Two other corporate appellees were not employers of NDIGC directors but are alleged to be co-conspirators of the other appellees.
ACC filed this RICO action against thе appellees on December 8, 1988. The gravamen of the complaint is that the appellees used the NDIGC as a RICO "enterprise" to engage in fraudulent activity that ultimately led to the collapse of Commonwealth and bilked depositors out of several million dollars. In January 1989, the appellees moved to dismiss the complaint as time-barred under Federal Rule of Civil Procedure 12(b)(6), but ACC filed a motion to stay the action while related litigation between the parties was pending before this Court. The District Court granted ACC's motion to stay the proceedings on March 9, 1989. When the related litigation was resolved, the appellees moved the court to lift the stay order and renewed their motion to dismiss
The Honorable Lyle E. Strom, United States District Judge for 1
the District of Nebraska.
the complaint. The District Court lifted its stay order and dismissed the complaint as time-barred. This appeal followed.
I.
This case has a long and complicated procedural history. It is necessary to review the preceding twelve years of litigation in this case because the accrual of the statute of limitations requires this Court to determine what the parties knew and whеn they knew it.
A. Proceedings Initiated By The Receiver
Commonwealth was declared insolvent in 1983. On November 1, 1983, the Nebraska Department of Banking and Finance (Department) took possession of Commonwealth. On November 8, 1983, the district court for Lancaster County, Nebraska, placed Commonwealth into receivership and appointed the Department receiver for Commonwealth (Receiver). At the time of its insolvency, Commonwealth was a member institution of the NDIGC--a state- chartered private corporation modeled after the Federal Deposit Insurance Corporation to guarantee deposits and shareholdings of member institutions. See Nebraska Depository Institution and Guaranty Corporation Act, Neb. Rev. Stat. §§ 21-17,127 to 21-17,145 (1991). The NDIGC originally guaranteed deposits up to $10,000 and subsequently increased that amount to $30,000. The $30,000 guarantee was in effect at the time Commonwealth was declared insolvent.
On December 23, 1983, the Receiver filed an action with the State Claims Board (Board) against the State of Nebraska under the State Tort Claims Act, Neb. Rev. Stat. §§ 81-8,209 to 81-8,239.06 (1981 & Supp. 1983), on behalf of all creditors to recover $56 million in losses sustained by Commonwealth creditors, alleging negligence of the Department in the regulation and supervision of Commonwealth. The Receiver alleged that the Department's employees
caused the creditors' losses by conspiring with officers and directors of the NDIGC to deceive the creditors of Commonwealth. The Receiver then filed an amended tort claim with the Board on January 10, 1984, for $56.4 million. Thе amended claim was similar to the first tort claim, except [2]
that it was brought on behalf of a special class of creditors--those certificate of indebtedness holders whose accounts were guaranteed by the NDIGC. The purpose of the amended claim was to recover the $30,000 NDIGC guarantee on behalf of each certificate of indebtedness holder. In thе amended claim, the Receiver alleged once again that the Department's employees caused losses by fraudulently conspiring with officers and directors of the NDIGC. Consequently, even though the two tort claims were directed primarily at the acts and omissions of the employees of the Department, many of the Receiver's allegations focused on аn alleged conspiracy between employees of the Department and NDIGC officers and directors--the same NDIGC individuals who are named as defendants in this RICO action. While these state tort actions were proceeding, the NDIGC itself collapsed due to severe under-capitalization of the NDIGC fund. The NDIGC met its untimely demise on January 4, 1985, without having satisfied its guarantee obligations to Commonwealth depositors.
The Board heard the Receiver's claims on February 13, 1984. In the proposed work-out plan submitted by the Receiver to the Board, the Receiver estimated a shortfall in NDIGC funds of approximately $57 million. At that time, the Receiver estimated NDIGC funds were a mere $1.2 million. On February 29, 1984, the Board found that there was a strong possibility that the State of Nebraska mаy be liable for the Department's actions with respect to the Nebraska Depository Institution Guaranty Corporation Act. Based on its findings, the Board decided that the state should The Receiver subsequently increased the amount sought to 2
$65.7 million.
compromise and settle the claims. In accordance with state law, the Receiver submitted the Board's decision to the Lancаster County district court for approval. After a hearing, the district court rejected the Board's settlement decision for numerous reasons. See In the Matter of the State Tort Claim of the Department of Banking and Finance of the State of Nebraska, Receiver of Commonwealth Savings Co., Docket 380, Page 10, Order *6 filed suit against the State of Nebraska on March 20, 1985, in Lancaster County district court, alleging numerous acts of wrongful and negligent conduct by the Department in failing to supervise, regulate, and examine Commonwealth, including wrongful and negligent conduct of the Department's director in admitting Commonwealth as a member of the NDIGC. Nine days later, the parties sought approval of an $8.5 million compromise settlement. The state district court subsequently approved this settlement agreement.
B. Proceedings Initiated By ACC
ACC was formed in 1985. In 1986, ACC filed its first RICO action in federal court against the former director of the state banking department and others as assignee of the causes of action of more than 2,600 Commonwealth creditors. See Complaint, Weimer v. Amen, No. 86-L-248 (D. Neb. March 24, 1986). An amended complaint was filed in 1987. A short time later, ACC also initiated a state law fraud action in Lancaster County district court with similar factual allegations against the same defendants, but without RICO allegations. The defendants in these cases asserted that ACC lacked standing to bring suit, claiming that the causes of action belonged to the Receiver. While these standing issues were pending before the federal and state courts, ACC obtained an assignment from the Receiver on December 2, 1988, which purported to assign all of the Receiver's remaining causes of action to ACC. ACC then filed this present RICO action on December 8, 1988, based upon the assignment from the Receiver; this action incorporates the identical RICO claim as alleged in the first RICO action, but cures the standing defect by alleging an assignment of the Receiver's causes of aсtion against the appellees. A new state court fraud action also was filed on December 5, 1988, based upon the assignment. Appellees filed joint motions to dismiss the new suits, but, at the request of ACC, these
new actions were stayed pending final decisions in the original suits.
In 1990, the Nebraska Supreme Court held that ACC lacked standing in
the original state fraud case. Weimer v. Amen,
After the courts entered final orders in the original suits, the
stays were lifted in the second set of suits. In 1994, the Nebraska
Supreme Court held that the second state fraud action was barred by
Nebraska's four-year statute of limitations. ACC v. Moylan,
II.
We review de novo the granting of a motion to dismiss under Rule
12(b)(6). Dover Elevator Co. v. Arkansas State University,
The issuе before us is whether ACC's second RICO action was filed
within the time allotted by the statue of limitations. In making this
determination, we are mindful that ACC stands in the shoes of its assignor-
-the Receiver of Commonwealth. The rights ACC acquired by assignment are
no greater than those possessed by the Receiver. See State Securities Co.
v. Daringer,
Civil RICO actions are governed by a four-year statute of
limitations. Agency Holding Corp. v. Malley-Duff & Assocs.,
We conclude that the facts of this case demonstrate that prior to December 8, 1984, the Receiver had knowledge of both the existence and source of its injury and that the injury was part of a pattern. In the first state tort claim filеd by the Receiver on December 23, 1983--nearly five years before this suit was filed--the Receiver alleged that state employees conspired with NDIGC officers and directors to defraud Commonwealth creditors. Less than a month later, in the amended state tort claim filed on January 10, 1984, the Receiver alleged once again that state employees conspired with NDIGC officers and directors to defraud Commonwealth depositors. Even though the Receiver failed to make NDIGC directors defendants in those state tort actions, the Receiver believed that the NDIGC directors--who are appellees in this case--were part of a conspiracy.
The documentary evidence submitted as part of these state tort proceedings also shows that the Receiver knew of the NDIGC's anemic financial condition more than four years before this suit was filed. The Receiver attached a work-out plan as part of these state tort proceedings that showed a shortfall in the NDIGC fund of approximately $57 million. After the state district court rejected this plan, a second petition showed that the Boаrd estimated a NDIGC shortfall in the range of $15 million to $45 million. Finally, the Miller-Domina reports showed that the failure of a major industrial thrift like Commonwealth would cause the collapse of the NDIGC.
In light of the facts and circumstances known to the Receiver through the state tort proceedings and the corresponding documentation, it is apparent that the Receiver had knowledge of the existence and source of the injury before December 8, 1984. The Receiver was also aware that the injury was part of pattern prior to December 8, 1984, because the Receiver refers throughout these documents to the "schemes," "conspiracies," and "frauds" conducted by the appellees. We agree with the District Court that *10 these "statements demonstrate that the Receiver was, at a minimum, aware of a vague pattern sufficient to satisfy the accrual requirements of Granite Falls Bank." ACC v. Moylan, No. 88-690, slip op. at 9 (D. Neb. Jan. 5, 1995). Accordingly, the Receiver, and ACC by assignment, knew of the existence, source, and pattern of injury more than four years before this suit was filed. The action is therefore time-barred.
ACC attempts to bring its stаle claim within the statute of limitations by arguing that Commonwealth depositors suffered a new and independent injury when the NDIGC collapsed on January 4, 1985. In other words, ACC argues that the collapse of NDIGC is a second injury for which the statute of limitations begins to run anew because, under Granite Falls, each independent RICO injury accrues separately. ACC complains that the District Court failed to realize that there were two economic injuries. This novel argument is fatally flawed for three reasons.
First, the second injury theory is not alleged anywhere in the
complaint; it is an entirely new contention. Second, even if this theory
were adequately pleaded and even if the NDIGC's inability to satisfy the
guarantees may be considered a distinct and separate injury with respect
to the depositors, the Nebraska Supreme Court has already determined that
any claim arising from such a second injury accrued on November 8, 1983,
when Commonwealth was declared insolvent. ACC v. Moylan,
the Receiver in December 1983 and January 1984. Indeed, the Receiver's January 10, 1984 tort claim specifically addressed the losses of the depositors' $30,000 account guarantees--the same injury that ACC now claims did not even occur until nearly a year later when the NDIGC closed. The insolvency of Commonwealth, and the consequent insolvency of the NDIGC, were at the very heart of the Receiver's allegations in the state tort claims.
Undeterred, ACC asserts that even if the Receiver knew of the NDIGC's
insolvency in January 1984, the limitations period did not begin to run
until the account guarantees became "uncollectible" on January 4, 1985,
when the NDIGC finally shut its doors. ACC claims that until the NDIGC
actually closed, there was a possibility that some fractional portion of
the depositors' guarantees might be honored. This argument reflects a
misunderstanding of the governing law. The Granite Falls test, properly
applied, does not postpone accrual of a RICO claim until the injured
party's damages can be ascertained with mathematical precision. Instead,
the limitations period begins to run even though the injured party, knowing
he has suffered an injury, may not yet knоw the full extent of his
injuries. Cf. Pace Indus., Inc. v. Three Phoenix Co.,
For the foregoing reasons, the judgment of the District Court is affirmed.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
Notes
[3] at 30 (Neb. Dist. Ct. March 16, 1984). In its thirty page opinion, the
district court pointed out that the Board had received into evidencе two
reports prepared by John Miller, the interim director for the Department,
and David A. Domina. These reports, commonly known as the Miller-Domina
reports, were highly critical of Paul Amen, the former state banking
director. The reports concluded that Mr. Amen did not exclude weak
industrial thrifts like Commonwealth from the NDIGC fund because he feared
that such action would expose the fact that the NDIGC had inadequate funds
to cover guarantees of the members' accounts, which, in turn, would create
a domino-like series of failures throughout the state's other industrial
thrifts.
After rejecting the proposed settlement, the district court remanded
the matter to the Board, which issued a second decision recommending a
compromise settlement once again. After conducting a hearing, the district
court also rejected this second Board decision. See In the Matter of the
State Tort Claim of the Department of Banking and Finance of the State of
Nebraska, Receiver of Commonwealth Savings Co., Docket 380, Page 10, Order
at 46 (Neb. Dist. Ct. July 27, 1984). The district court then remanded the
matter to the Board yet again to allow the Receiver to withdraw the claim
and to file suit on the claim. The Receiver
At the request of both sides, Judge Strom took judicial
3
notice of this case and other closely related cases. Consequently,
we may properly consider them when reviewing this motion to
dismiss. See Henson v. CSC Credit Services,