Opinion ID: 701727
Heading Depth: 2
Heading Rank: 3

Heading: Laches and the Statute of Limitations.

Text: 17 In its disposition of the case below, the district court held that Jeanblanc's claims were barred by the three-year statute of limitations applicable to contract actions in the District of Columbia. See D.C. Code Ann. Sec. 12-301(7) (1994). Appellant claims that the district court erroneously applied the three-year statute instead of a twelve-year statute of limitations accorded documents under seal. See id. Sec. 12-301(6). Relying upon the proposition that, under District of Columbia law, a party who signs an instrument to which another has affixed his seal is presumed to adopt the seal, see McNulty v. Medical Service of D.C., Inc., 176 A.2d 783, 784 (D.C. 1962), appellant contends that the twelve-year statute applies here because the partnership agreement governing Square 224 was signed under seal by all of the limited partners. 18 Assuming arguendo the correctness of appellant's proposition that the twelve-year statute of limitations applies, we nonetheless conclude that appellant's claim is barred under the doctrine of laches. Although appellant's claims may be within the twelve-year period authorized by statute, the statute of limitations provides only the outside limit beyond which [the legislature] has determined claims are simply too stale to be litigated. Detweiler v. Pena, 38 F.3d 591, 595 (D.C. Cir. 1994) (quoting, with approval, Deering v. United States, 620 F.2d 242, 245 (Ct. Cl. 1980)). Even where the twelve-year statute mandated for documents under seal applies, a claim may be otherwise barred as untimely by the equitable doctrine of laches. See Amidon v. Amidon, 280 A.2d 82, 84 (D.C. 1971) (applying laches in case involving separation agreement where only seven of the twelve years allowed by statute had passed). 19 In order to apply laches to bar a claim as untimely, a defendant must show that the plaintiff has unreasonably delayed in asserting a claim and that there was undue prejudice to the defendant as a result of the delay. American Univ. Park Citizens Ass'n v. Burka, 400 A.2d 737, 740 (D.C. 1979). 20 We believe that Jeanblanc's delay until 1990 in filing suit was unreasonable and inexcusable. The record reflects that Carr provided sufficient information regarding the disputed transactions at a May 1980 meeting of the partners to put Jeanblanc on notice of all relevant facts. Again, after executing the agreement with Equitable Life Assurance Society, in February 1981, Carr provided detailed handouts indicating how Jeanblanc's shares would decrease in percentage terms. Additionally, Carr informed Jeanblanc of the challenged transfers to James Clark in 1982. Our review of the record reveals that appellants had sufficient information at that time to challenge Carr's calculation of ownership interests. Jeanblanc's rationale for not challenging these transactions earlier -- that appellees had misled them into believing that the transactions conformed to the partnership agreement -- is unavailing because Jeanblanc had a copy of that agreement to refute that claim. Thus, with respect to count one and the claim that Carr improperly transferred an interest to James Clark, we conclude that Jeanblanc's delay of nearly eight years in filing suit was unreasonable. 21 Next, we agree with Carr that Jeanblanc's delay in filing suit unduly prejudiced Carr. In the normal course of its business, Carr had destroyed certain business documents -- including invoices, bank statements, cancelled checks, etc. -- with which it could have been able to defend itself had the claim been brought in a timely manner. Among the inequities that the doctrine of laches protects against is the loss of pertinent evidence. See NAACP v. NAACP Legal Defense & Educ. Fund, Inc., 753 F.2d 131, 137 (D.C. Cir.), cert. denied, 472 U.S. 1021 (1985). Appellant claims that undue prejudice cannot arise from the destruction of one's own documents. Although we agree that under certain circumstances -- such as a potential defendant having knowledge of pending claims -- destruction of evidence will clearly not support a finding of prejudice, see EEOC v. Massey-Ferguson, Inc., 622 F.2d 271, 280 (7th Cir. 1980); Bernard v. Gulf Oil Co., 596 F.2d 1249, 1257 (5th Cir. 1979), we find that the circumstances here present a compelling case of undue prejudice. Appellee's destruction of documents was not willful; rather, the documents were destroyed in the ordinary course of business. Because the documents themselves were not documents under seal, it was reasonable for appellee to destroy them after the lapse of the normal three-year period of limitations. See D.C. Code Ann. Sec. 12-301(7). 22 We thus conclude that appellee has met its burden of demonstrating unreasonable delay and undue prejudice and hold that both count one and appellant's claim regarding transfers of interests to James Clark are thus barred by the equitable doctrine of laches. 23 B. Other Claims. 24 We agree with the district court that appellant's separate claims regarding sales of interests to employees and the amount paid per percentage point of interest in the partnership are meritless. 25 The partnership agreement excepted from the right of first refusal any transfers without consideration and any assignments to subsidiaries. The challenged transfers meet both criteria. The assignments to Carr employees were in recognition of past services, as indicated by the language in the assignment documents, [I]n recognition of [the employee's] efforts, ability and diligence exhibited in the course of his employment, the Carr Company has assigned to him a portion of said participatory interest. As we have noted, past consideration is no consideration. Murray v. Lichtman, 339 F.2d 749, 752 n. 5 (D.C. Cir. 1964). Thus, these assignments are excepted from the agreement as transfers without consideration. Additionally, because the transaction regarding each employee is, at least in form, a transfer to a subsidiary, the employee transfers are excepted. The district court thus correctly dismissed these claims. 26 Finally, the district court correctly noted that the documents submitted by both parties indicated that each partner cashing out of the partnership would receive $789,000 from the sale of each percentage point in the transaction. Appellant's claim here is utterly baseless and thus properly rejected. 27 C. Sanctions. 28 The record demonstrates that Lindsey Jeanblanc's destruction of documents was knowing and willful, unlike that of the appellee which was done in the normal course of business. In cases involving the willful, systematic, and extensive destruction ... of documents, we have clearly stated that a district court may dismiss an entire case as a sanction. See Synanon Church v. United States, 820 F.2d 421, 427 (D.C. Cir. 1987). Dismissal is an option at the disposal of a district court in exercising its inherent power ... to levy sanctions in response to abusive litigation practices. Roadway Express, Inc. v. Piper, 447 U.S. 752, 765 (1980). The sanction was particularly appropriate here, where the documents were destroyed willfully and the opponent is in no position to present evidence of their content. See Synanon Church, 820 F.2d at 428 (The occurrence of a cover-up raises a presumption that disclosure of the materials would be damaging.). 29 Accordingly, the decision of the district court is affirmed.