Opinion ID: 585254
Heading Depth: 2
Heading Rank: 3

Heading: accrual of rico statute of limitations

Text: 41 The district court held that the proper test for determining the timeliness of plaintiff's RICO claim is whether plaintiff knew or should have known of the alleged fraudulent misrepresentations concerning the oxygen-limiting characteristics of the silo prior to October 9, 1983 (four years prior to the filing of the Van Sickles' counterclaim). (citing Hofstetter v. Fletcher, 905 F.2d 897, 904 (6th Cir.1988)). 42 In Agency Holding Corp. v. Malley-Duff & Assoc., Inc., 483 U.S. 143, 107 S.Ct. 2759, 97 L.Ed.2d 121 (1987), the Supreme Court held that the statute of limitations for RICO claims is four years. The Court did not establish an accrual standard, and we have not decided this issue apart from dictum in the pre-Agency case cited by the district court. 43 There are three accrual methods currently used by the Courts of Appeals. One is the so-called last predicate act rule which states: 44 the limitations period for a civil RICO claims runs from the date the plaintiff knew or should have known that the elements of the civil RICO cause of action existed unless, as part of the same pattern of racketeering activity, there is further injury to the plaintiff or further predicate acts occur, in which case the accrual period shall run from the time when the plaintiff knew or should have known of the last injury or the last predicate act which is part of the same pattern of racketeering activity. 45 Keystone Ins. Co. v. Houghton, 863 F.2d 1125, 1130 (3d Cir.1988). We note that under this rationale, in certain cases where the illegal activity is allegedly continuous, the statute of limitations will never begin to run. This conflicts with the public policy of repose which is the source of such statutes in the first place. We decline to adopt this rule. 46 Several Circuits follow some form of discovery rule. See e.g., Stitt v. Williams, 919 F.2d 516, 525 (9th Cir.1990); Rodriguez v. Banco Central, 917 F.2d 664, 665 (1st Cir.1990); Bankers Trust Co. v. Rhoades, 859 F.2d 1096, 1103 (2d Cir.1988), cert. denied, 490 U.S. 1007, 109 S.Ct. 1642, 104 L.Ed.2d 158 (1989); Pocahontas Supreme Coal Co. v. Bethlehem Steel Corp., 828 F.2d 211, 220 (4th Cir.1987); LaPorte Constr. Co. v. Bayshore Nat'l Bank, 805 F.2d 1254, 1256 (5th Cir.1986). In Hofstetter, we implicitly approved the discovery rule, observing that the trial court correctly instructed the jury to determine whether the plaintiff knew or should have known of the defendants' fraudulent scheme before.... Hofstetter, 905 F.2d at 904. 47 Still other Circuits follow a compromise rule. 48 [A] civil RICO cause of action begins to accrue as soon as the plaintiff discovers, or reasonably should have discovered, both the existence and source of his injury and that the injury is part of a pattern. 49 Bivens Gardens Office Bldg., Inc. v. Barnett Bank of Florida, Inc., 906 F.2d 1546, 1554-55 (11th Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 1695, 114 L.Ed.2d 89 (1991); see also Granite Falls Bank v. Henrikson, 924 F.2d 150 (8th Cir.1991); Bath v. Bushkin, Gaims, Gaines & Jonas, 913 F.2d 817 (10th Cir.1990). 50 West Marion argues that we should adopt the Bivens rule, though in the district court it sought application of the last predicate act standard. Harvestore and Smith maintain that even if we adopt the Bivens approach, then West Marion's claim is still barred by the pertinent four-year statute of limitations because West Marion knew or should have known of the injury, the source of the injury and that the injury was part of a pattern prior to October, 1983. Under either the discovery rule or the Bivens rule, we hold that West Marion's RICO claim is barred. If West Marion's claim fails to satisfy the more generous Bivens rule, then it also fails under the discovery rule as well. We will, therefore, examine the Bivens analysis. 51 We are satisfied that, as a matter of law, West Marion knew or should have known of the alleged injuries and the source of the injuries by at least mid-1982, when the problems with the second silo became apparent. As of that time, West Marion began to experience the deaths of many calves in addition to the continuing problems of reduced production by the herd and protein loss in the stored grain. Although the Van Sickles may not have had subjective knowledge linking their injuries to the Harvestore silos, we hold, as a matter of law, that a reasonable person should have determined that the calf losses of mid-1982 were caused by the poisoned grain and hay. 52 We believe that the same facts prove West Marion knew or should have known by mid-1982 that the alleged misrepresentations and injuries were part of a pattern. A pattern consists of at least two acts of racketeering activity, one of which occurred after [October 15, 1970] and the last of which occurred within ten years ... after the commission of a prior act of racketeering activity. 18 U.S.C. § 1961(5). To establish a pattern a plaintiff must prove both  'a relationship between the predicates' and the 'threat of continuing activity.'  Vild v. Visconsi, 956 F.2d 560, 565 (6th Cir.1992). In the present case, West Marion alleges predicate acts consisting of wire and mail fraud related to the promotion, sale and lease of silos. West Marion relies on alleged, illegal representations made between 1972 and 1986. We are satisfied, as a matter of law, that West Marion should have determined that the representations were part of a pattern at the same time it should have discovered that the silos caused the alleged problems on the dairy farm. 53 Since West Marion knew or should have known of its injuries, the source of its injuries and that its injuries were part of a pattern prior to October, 1983, we affirm the district court's grant of summary judgment in favor of Harvestore and Smith on the RICO claim.