Court Opinion

ID: 9881860
Source: CourtListenerOpinion
Date Created: 2023-10-04 15:00:34.119333+00
Date Added: 2024-06-11T14:25:19.936624
License: Public Domain

22-0681-cv
Bai v. Tegs Management, LLC

                      UNITED STATES COURT OF APPEALS
                          FOR THE SECOND CIRCUIT
                                 SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary order
filed on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate
Procedure 32.1 and this court’s Local Rule 32.1.1. When citing a summary order in a
document filed with this court, a party must cite either the Federal Appendix or an
electronic database (with the notation “summary order”). A party citing a summary order
must serve a copy of it on any party not represented by counsel.

       At a stated term of the United States Court of Appeals for the Second Circuit,
held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the
City of New York, on the 4th day of October, two thousand twenty-three.

       PRESENT:        John M. Walker, Jr.,
                       Steven J. Menashi,
                       Eunice C. Lee,
                               Circuit Judges.
____________________________________________

SHIXU BAI,

                Plaintiff-Appellant,

         v.                                                    No. 22-0681

TEGS MANAGEMENT, LLC, GRAND MARKET
INTERNATIONAL CORP., SERGE BAUER, P.C.,
SERGE BAUER, SYOMA SHNAYDER, EDUARDO
SHNAYDER,         GREGORY        TOLSTON,        ARTHUR
GAVRILOV, ALBERT NIYAZOV, BENI SNIEDER,

                Defendants-Appellees.
____________________________________________
For Plaintiff-Appellant:                     JOSHUA FULD NESSEN, The Maddox
                                             Law    Firm,    LLC,    New     Canaan,
                                             Connecticut.

For Defendants-Appellees Tegs                DAVID A. GOLD (Dana M. Susman, on
Management, LLC, Grand Market                the brief), Kane Kessler, P.C., New York,
International Corp., Syoma Shnayder,         New York.
Eduardo Shnayder, Gregory Tolston,
Arthur Gavrilov, Albert Niyazov and
Beni Snieder:

For Defendants-Appellees Serge Bauer,        ADONAID CASADO MEDINA, Vigorito,
P.C. and Serge Bauer:                        Barker, Patterson, Nichols & Porter,
                                             LLP, Valhalla, New York.

      Appeal from a judgment of the United States District Court for the Southern
District of New York (Cote, J.).

      Upon due consideration, it is hereby ORDERED, ADJUDGED, and
DECREED that the judgment of the district court is AFFIRMED.

      Plaintiff-Appellant Shixu Bai is a Chinese citizen. In 2013, Bai made a $1
million investment in a New York grocery business in hopes of obtaining an EB-5
investor visa. United States Citizenship and Immigration Services (“USCIS”)
eventually denied Bai’s visa application in 2019, and Bai filed this lawsuit against
his former attorney and business partners, alleging, inter alia, common-law fraud.
The district court dismissed Bai’s action as time-barred. We assume the parties’
familiarity with the facts, procedural history, and issues on appeal.

                                         2
      “We review de novo a district court’s grant of a motion to dismiss, including
its legal interpretation and application of a statute of limitations.” Deutsche Bank
Nat. Tr. Co. v. Quicken Loans Inc., 810 F.3d 861, 865 (2d Cir. 2015). We do so
“accepting as true all factual claims in the complaint and drawing all reasonable
inferences in the plaintiff’s favor.” Altimeo Asset Mgmt. v. Qihoo 360 Tech. Co., 19
F.4th 145, 147 (2d Cir. 2021) (quoting Henry v. Cty. of Nassau, 6 F.4th 324, 328 (2d
Cir. 2021)).

      Under New York law, “an action based upon fraud” must be commenced
within “the greater of six years from the date the cause of action accrued or two
years from the time the plaintiff … discovered the fraud, or could with reasonable
diligence have discovered it.” N.Y. C.P.L.R. § 213(8). “A fraud claim accrues when
‘the claim becomes enforceable, i.e., when all elements of the tort can be truthfully
alleged in a complaint.” Meimaris v. Royce, No. 19-3339, 2021 WL 5170725, at *3 (2d
Cir. Nov. 8, 2021) (quoting IDT Corp. v. Morgan Stanley Dean Witter & Co., 907
N.E.2d 268, 273 (N.Y. 2009)). The elements of fraud under New York law are “(1) a
material misrepresentation or omission of a fact, (2) knowledge of that fact’s
falsity, (3) an intent to induce reliance, (4) justifiable reliance by the plaintiff, and
(5) damages.” Loreley Fin. (Jersey) No. 3 Ltd. v. Wells Fargo Sec., LLC, 797 F.3d 160,
170 (2d Cir. 2015) (citing Eurycleia Partners, LP v. Seward & Kissel, LLP, 910 N.E.2d
976, 979 (N.Y. 2009)).

      Bai alleges that in 2013, the defendants induced him to invest in Tegs
Management, LLC, by falsely representing that the investment would qualify him
for an EB-5 visa while providing a risk-free return, knowing that the redemption
clause in the operating agreement would cause USCIS to deny Bai’s EB-5
application. Given the allegations in Bai’s complaint, he could have truthfully
alleged all five elements of fraud when he invested in Tegs based on the allegedly
fraudulent documents prepared by the defendants. His cause of action therefore
accrued in 2013. Because he filed this action on June 28, 2020—more than six years
later—his action is time-barred unless the two-year discovery rule applies.

                                           3
         Under the two-year discovery rule for common-law fraud claims in New
York, the limitations period begins to run when a plaintiff has actual or inquiry
notice of his injury. See Cohen v. S.A.C. Trading Corp., 711 F.3d 353, 361 (2d Cir.
2013). “[I]nquiry notice is triggered by awareness of facts which a reasonable
person would investigate.” Id. at 363. Once a plaintiff is on inquiry notice, if he
makes no inquiry, he is charged with knowledge of the fraud as of the date the
duty to inquire arose. Id. at 361-62. A reasonable investor with Bai’s stated goals—
to invest only in an enterprise that would qualify him for an EB-5 visa—would
have inquired into whether he had been defrauded when USCIS told him it would
deny his EB-5 application because of the redemption clause in the operating
agreement. Bai was therefore on inquiry notice from September 8, 2015, when
USCIS issued its Notice of Intent to deny his application. 1 Because Bai did not file
his action until 2020—more than two years after the duty to inquire arose—the
district court properly dismissed his action as time-barred.

                                      *      *      *

         We have considered Bai’s remaining arguments, which we conclude are
without merit. For the foregoing reasons, we AFFIRM the judgment of the district
court.

                                           FOR THE COURT:
                                           Catherine O’Hagan Wolfe, Clerk of Court

1 Bai argues that “[a]s a specialist in EB-5 investments, … Bauer certainly knew that the
redemption clause was improper and acted with the intent to deceive [Bai] and induce
his $2 million [sic] investment. J. App’x 65. These allegations form the core of Bai’s fraud
claim and are based on information he had, and inferences he could have drawn, in 2015.
See Cohen, 711 F.3d at 361 (noting that the duty to inquire is triggered by information that
“relates directly to the misrepresentations and omissions the [p]laintiffs later allege in
their action against the defendants”) (quoting Newman v. Warnaco Grp., 335 F.3d 187, 193
(2d Cir. 2003)).

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