Opinion ID: 463698
Heading Depth: 2
Heading Rank: 1

Heading: The Due Diligence Doctrine

Text: 69 1. The applicable rule. In Fitzgerald v. Seamans, 553 F.2d 220, 228 (D.C.Cir.1977), this court stated: 70 Read into every federal statute of limitations    is the equitable doctrine that in the case of defendant's fraud or deliberate concealment of material facts relating to his wrongdoing, time does not begin to run until plaintiff discovers, or by reasonable diligence could have discovered, the basis of the lawsuit. 71 The due diligence doctrine was reiterated in Richards v. Mileski, 662 F.2d 65, 71 (D.C.Cir.1981), where Judge Mikva, writing for the court, noted that the fraudulent concealment of a plaintiff's cause of action would toll the statute of limitations until a plaintiff has, or through due diligence should have had, notice of his claim. See also Smith v. Nixon, 606 F.2d 1183, 1191 (D.C.Cir.1979). More recently, in Hobson v. Wilson, 737 F.2d 1, 35 (D.C.Cir.1984), cert. denied, --- U.S. ----, 105 S.Ct. 1843, 85 L.Ed.2d 142 (1985), Judge Edwards refined this standard by stating that fraudulent concealment would toll the statute of limitations until a plaintiff could have discovered facts giving notice of the particular cause of action at issue, not of just any cause of action. 72 Appellee argues, however, that the due diligence doctrine is not applicable to this case because fraudulent concealment cannot toll a statute of limitations governing claims against the United States. Brief of appellee at 20. And although Fitzgerald declared that the doctrine of tolling for fraudulent concealment must be read into every statute of limitations, 553 F.2d at 228, this court has not previously addressed the question of whether every statute of limitations necessarily includes statutes of limitations governing claims against the United States. 73 Appellee largely rests its argument on Block v. North Dakota ex rel. Board of University and School Lands, 461 U.S. 273, 287-88, 103 S.Ct. 1811, 1819-20, 75 L.Ed.2d 840 (1983), and Soriano v. United States, 352 U.S. 270, 276, 77 S.Ct. 269, 273, 1 L.Ed.2d 306 (1957). These cases firmly establish the proposition that statutes of limitations governing claims against the United States, as conditions on waivers of sovereign immunity, are to be strictly construed. Fully aware of this principle, we nonetheless believe that fraudulent concealment tolls 28 U.S.C. Sec. 2401(a) (1982), the statute of limitations at issue in this case. 74 An analysis of the historical background of 28 U.S.C. Sec. 2401(a) supports the view that fraudulent concealment does toll the statute. Long before the predecessor to Section 2401(a) was first enacted in 1863, 12 Stat. 765 (37th Cong., 3d Sess. March 3, 1863), a majority of United States jurisdictions has held that a defendant's subsequent concealment of a fraud would toll the statute of limitations. See Bailey v. Glover, 88 U.S. (21 Wall.) 342, 348-49, 22 L.Ed. 636 (1875) (collecting cases). 49 Not surprisingly, the Supreme Court has held that [t]his equitable doctrine is read into every federal statute of limitation. Holmberg v. Armbrecht, 327 U.S. 392, 397, 66 S.Ct. 582, 585, 90 L.Ed. 743 (1946). Several federal Courts of Appeals have therefore held that fraudulent concealment by the United States will toll the statute of limitations. See, e.g., Barrett v. United States, 689 F.2d 324, 329-30 (2d Cir.1982), cert. denied, 462 U.S. 1131, 103 S.Ct. 3111, 77 L.Ed.2d 1366 (1983); Welcker v. United States, 752 F.2d 1577, 1580 (Fed.Cir.1985). See also Japanese War Notes Claimants Ass'n of the Philippines, Inc. v. United States, 178 Ct.Cl. 630, 373 F.2d 356, 358-359, cert. denied, 389 U.S. 971, 88 S.Ct. 466, 19 L.Ed.2d 461 (1967). 50 75 The foregoing suggests that it would have been inconceivable to the drafters of the statute to read it as exempting the United States from the doctrine of tolling for fraudulent concealment. 51 This conclusion does not contradict the proposition that Section 2401(a) must be strictly construed. 52 We do not interpolate a provision of tolling for fraudulent concealment on the basis of our notions of equity. 53 Rather, we believe that the 1863 Congress simply assumed that this doctrine was incorporated in every statute of limitations and that it would do violence to the intent of Congress for us to hold to the contrary. 76 For rather different reasons appellants also argue that the due diligence doctrine is not applicable to this case. Our previous cases applying the due diligence doctrine concerned wrongs that were self-concealing. See Hobson v. Wilson, supra, 737 F.2d at 34. Noting that this case concerns a wrong that is usually knowable but which has only been obscured by an alleged subsequent positive act of concealment, appellants argue that we should reject the due diligence rule in favor of a standard providing for tolling of the statute until a plaintiff had actually discovered what was concealed. Brief of appellants at 28. There appears to be a split in the circuits on this point. Compare Tomera v. Galt, 511 F.2d 504, 510 (7th Cir.1975) (applying an actual discovery rule), with Campbell v. Upjohn Co., 676 F.2d 1122, 1128 (6th Cir.1982) (applying the due diligence rule). 54 77 Given the particular facts of this case, we cannot accept the actual discovery standard suggested by appellants. It is the legal effect of fraudulent concealment that tolls the statute, not its immorality. It is one thing to toll the statute of limitations until a reasonable plaintiff could undo the effects of concealment. It is quite another matter to discharge a plaintiff completely from his usual obligations to conduct reasonable inquiries into the grounds supporting his cause. The former course merely nullifies the effect of concealment. It allows the statute of limitations to operate in the manner that Congress provided and under the assumption that Congress did not intend for the United States to abuse such statutes by engaging in conscious frauds. The latter approach, by contrast, serves as a punitive measure and perhaps as a deterrent of future fraud. Although such deterrence might make sound policy, we refuse to imply it in an action against the United States absent a congressional suggestion in that direction. 78 2. Interpreting the due diligence rule. Unfortunately, our cases do not provide operational definitions of the key terms of the governing standard. Thus tolling is triggered by concealment of the facts giving notice of the particular cause of action at issue. Hobson v. Wilson, supra, 737 F.2d at 35. What falls within the ambit of that phrase, however, is not self-evident. Similarly, the statute begins to run when a duly diligent plaintiff would have discovered that which was concealed; but due diligence is hardly self-explanatory. Because the facts of this case are sui generis, we will refrain from definitively restating the due diligence doctrine. This is not the occasion to establish a new rule to govern future cases. We seek only to clarify our prevailing formula so that there is no mystery as to the basis of our decision here. 79 (a) What tolls the statute: concealment of the factual basis of a complaint. Appellee argues that the facts giving notice of the particular cause of action at issue include only the fact of injury and the identity of the inflictor. Brief of appellee at 22, 24. We do not agree. As already noted, in assessing the import of fraudulent concealment we are first and foremost concerned with its legal effect. 55 Once a defendant has effectively closed the courthouse door to all plaintiffs it is of little significance that that defendant has not also concealed his identity or the fact of injury. 56 80 Thus, where a defendant concealed information that prevented a plaintiff from alleging a crucial element of his claim, the statute would be tolled. 57 Nor would it change our analysis if a defendant had achieved the same effect by concealing facts that would prevent a plaintiff from overcoming a seemingly ironclad defense. For, as the District Court suggested, where the result is the same--to prevent a law-abiding plaintiff from filing a complaint--it matters little whether the issue is labeled a claim or a defense. 586 F.Supp. at 787. 81 (b) When the statute begins to run. Due diligence also lacks a precise definition. But unlike the concept of the factual basis of the complaint, the concept of due diligence is best left unfocused. As we read our cases, due diligence refers to a fact-specific judgment in each case as to what a reasonable plaintiff could be expected to do. See Richards v. Mileski, supra, 662 F.2d at 71. 82 Nonetheless, two specific guidelines do emerge from our cases. First, in evaluating the extent of a plaintiff's constructive knowledge a court ought to pay careful attention to whether a plaintiff was ever put on notice that further inquiries might be appropriate. See Hobson v. Wilson, supra, 737 F.2d at 35 n. 107. Of course, a court must still make a situation-specific judgment as to when (or if) subsequent inquiries might have produced the factual basis of a good faith complaint. But an initial determination on when a plaintiff was put on inquiry notice will help to narrow the issue. On the other hand, the fact that a plaintiff is on inquiry notice does not, without more, begin the running of the statute. See id. at 35. Inquiry notice is merely a necessary, but not a sufficient, condition for the running of the statute. Whether such inquiries would lead a diligent plaintiff to discover that which was concealed will naturally vary with the facts of each case.