Court Opinion

ID: 182029
Source: CourtListenerOpinion
Date Created: 2010-12-30 18:53:14+00
Date Added: 2024-06-11T09:43:01.784332
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                              No. 09-2135

CSX TRANSPORTATION, INCORPORATED,

                Plaintiff - Appellant,

          v.

ROBERT V. GILKISON; PEIRCE, RAIMOND & COULTER, PC, a/k/a
Robert   Peirce   &   Associates,   P.C.,    a   Pennsylvania
Professional Corporation; JOHN DOES; ROBERT N. PEIRCE, JR.;
LOUIS A. RAIMOND; MARK T. COULTER; RAY A. HARRON, Dr.,

                Defendants – Appellees,

          and

RICHARD CASSOFF, M.D.,

                Party-in-Interest,

LUMBERMENS MUTUAL CASUALTY COMPANY,

                Intervenor.

----------------------------------

AMERICAN SOCIETY OF RADIOLOGIC TECHNOLOGISTS; AMERICAN TORT
REFORM ASSOCIATION; ASSOCIATION OF AMERICAN RAILROADS;
DANIEL   E.   BANKS;  COALITION  FOR   LITIGATION  JUSTICE,
INCORPORATED; ALFRED FRANZBLAU; LAWRENCE MARTIN; NATIONAL
ASSOCIATION OF MANUFACTURERS; PROPERTY CASUALTY INSURERS
ASSOCIATION OF AMERICA; VIRGINIA SOCIETY OF RADIOLOGIC
TECHNOLOGISTS; WASHINGTON LEGAL FOUNDATION; WEST VIRGINIA
CHAMBER OF COMMERCE,

                Amici Supporting Appellant.
Appeal from the United States District Court for the Northern
District of West Virginia, at Wheeling.     Frederick P. Stamp,
Jr., Senior District Judge. (5:05-cv-00202-FPS-JES)

Argued:   October 26, 2010             Decided:   December 30, 2010

Before DUNCAN, AGEE, and DAVIS, Circuit Judges.

Affirmed in part, vacated in part, and remanded by unpublished
per curiam opinion.   Judge Davis wrote a separate concurring
opinion.

ARGUED: Dan Himmelfarb, MAYER BROWN, LLP, Washington, D.C., for
Appellant.   Walter P. DeForest, III, DEFOREST KOSCELNIK YOKITIS
KAPLAN & BERARDINELLI, Pittsburgh, Pennsylvania, for Appellees.
ON BRIEF: Evan M. Tager, Michael B. Kimberly, MAYER BROWN, LLP,
Washington, D.C.; E. Duncan Getchell, Jr., Samuel L. Tarry, Jr.,
Mitchell K. Morris, MCGUIREWOODS LLP, Richmond, Virginia; Marc
E.   Williams,   Robert  L.   Massie,   NELSON   MULLINS   RILEY   &
SCARBOROUGH LLP, Huntington, West Virginia, for Appellant.
Robert A. Lockhart, SCHUDA & ASSOCIATES, PLLC, Charleston, West
Virginia, David J. Berardinelli, Matthew S. McHale, DEFOREST
KOSCELNIK    YOKITIS    KAPLAN    &    BERARDINELLI,     Pittsburgh,
Pennsylvania, for Appellees Peirce, Raimond & Coulter, PC,
Robert N. Peirce, Jr., Louis A. Raimond, and Mark T. Coulter;
Lawrence S. Goldman, Elizabeth M. Johnson, LAW OFFICES OF
LAWRENCE S. GOLDMAN, New York, New York, Jerald E. Jones, WEST &
JONES, Clarksburg, West Virginia, Ron Barroso, Corpus Christi,
Texas, for Appellee Ray A. Harron; John E. Gompers, GOMPERS,
MCCARTHY & MCCLURE, Wheeling, West Virginia, Stanley W.
Greenfield, GREENFIELD & KRAUT, Pittsburgh, Pennsylvania, for
Appellee Robert V. Gilkison.      David P. Goch, Heidi K. Abegg,
WEBSTER CHAMBERLAIN & BEAN, Washington, D.C., for American
Society of Radiologic Technologists and Virginia Society of
Radiologic Technologists; Ashley C. Parrish, Candice Chiu, KING
& SPALDING LLP, Washington, D.C., for American Society of
Radiologic Technologists, Amici Supporting Appellant.        Mark A.
Behrens, Cary Silverman, SHOOK, HARDY & BACON, LLP, Washington,
D.C.; H. Sherman Joyce, AMERICAN TORT REFORM ASSOCIATION,
Washington, D.C.; Ann W. Spragens, Sean McMurrough, PROPERTY
CASUALTY INSURERS ASSOCIATION OF AMERICA, Des Plaines, Illinois;
Quentin    Riegel,   NATIONAL    ASSOCIATION   OF    MANUFACTURERS,
Washington, D.C.; Daniel Saphire, ASSOCIATION OF AMERICAN

                                 2
RAILROADS,   Washington,   D.C.,   for   American    Tort   Reform
Association, Association of American Railroads, Coalition for
Litigation   Justice,  Incorporated,   National   Association   of
Manufacturers, and Property Casualty Insurers Association of
America, Amici Supporting Appellant. David Craig Landin, Cheryl
G. Ragsdale, HUNTON & WILLIAMS LLP, Richmond, Virginia, for
Daniel E. Banks, Alfred Franzblau, and Lawrence Martin, Amici
Supporting Appellant.     Daniel J. Popeo, Richard A. Samp,
WASHINGTON LEGAL FOUNDATION, Washington, D.C., for Washington
Legal Foundation, Amicus Supporting Appellant.           Scott L.
Winkelman, Michael L. Martinez, Robert L. Willmore, Jennifer G.
Knight, CROWELL & MORING LLP, Washington, D.C., for West
Virginia Chamber of Commerce, Amicus Supporting Appellant.

Unpublished opinions are not binding precedent in this circuit.

                                3
PER CURIAM:

      CSX Transportation, Incorporated (“CSX”) filed a complaint

against   Robert   V.   Gilkison   (“Gilkison”),   Peirce,   Raimond    &

Coulter, P.C. (“Peirce firm”), Robert N. Peirce, Jr. (“Peirce”),

Louis A. Raimond (“Raimond”), Mark T. Coulter (“Coulter”), and

Ray   Harron,   M.D.    (“Harron”),     alleging   violations   of     the

Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18

U.S.C. § 1961, et seq., common law fraud, and civil conspiracy,

all “aris[ing] from the successful efforts of the defendants to

deliberately fabricate and prosecute objectively unreasonable,

false and fraudulent asbestosis claims against CSX.” (J.A. 143). 1

      The district court granted defendants’ motion to dismiss as

to the RICO counts and as to all but two fraud counts.                 On

appeal, CSX contends that the district court erred by dismissing

those RICO and fraud claims, abused it discretion by denying CSX

leave to amend its complaint, erred by granting the defendants’

motion for summary judgment on one remaining fraud count, and

abused its discretion by excluding certain evidence during trial

on another fraud count.     For the following reasons, we affirm in

part and vacate in part the district court’s judgment and remand

the case for further proceedings.

      1
       We refer to the individuals Peirce, Raimond, and Coulter
collectively as the “lawyer defendants” in keeping with the use
of that convention by the parties and the district court.

                                    4
                                           I.

       In its first amended complaint (hereinafter “complaint”), 2

CSX alleges that the defendants—a law firm, certain attorneys,

an investigator, and a medical expert, all employed by the law

firm—“embarked         upon    a   calculated     and     deliberate    strategy      to

participate in and to conduct the affairs of the Peirce firm

through a pattern and practice of unlawful conduct, including

bribery, fraud, conspiracy, and racketeering,” (J.A. 145), by

“orchestrat[ing] a scheme to inundate CSX[] and other entities

with       thousands   of     asbestosis     cases   without     regard      to    their

merit.” (J.A. 142).

       In order to perpetrate this alleged scheme, CSX contends

“the       lawyer   defendants      gained       access    to   potential     clients

through      unlawful    means,     [and]       retained   clients     and   procured

medical diagnoses for them through intentionally unreliable mass

screenings.” (J.A. 145-46).                CSX charges that the screenings

were unreliable, in part, because “[t]he lawyer defendants . . .

deliberately hired unreliable doctors such as . . . Harron to

‘read’ the x-rays for signs of asbestosis.” (J.A. 148).                           In the

complaint, CSX averred that, Harron “agreed to read unusually

high numbers of x-rays with reckless or deliberate disregard for

       2
       CSX’s original complaint was dismissed without prejudice,
and CSX was granted leave to amend.

                                            5
their    true       content       with    the    full      knowledge         that    the       lawyer

defendants intended to file personal injury claims based on his

diagnoses.” (J.A. 163).                  Ultimately, CSX alleges that defendants

used    this    scheme        to    “fabricate[]           and    prosecute[]         asbestosis

claims with no basis in fact.” (J.A. 146).

        The    complaint       specifies         nine      personal         injury    suits       the

Peirce firm filed against CSX on behalf of former CSX employees,

which    CSX    alleges       to    have       been   “a    deliberate         effort       by    the

lawyer defendants to defraud CSX[].” (J.A. 160).                               Count 1 of the

complaint charged the lawyer defendants with violating RICO as

to    each     of     the    nine     suits      while      Count       2    charged       a     RICO

conspiracy       as    to     those      suits.         Count     3    charged       the       lawyer

defendants, individually, with common law fraud as to each of

the    nine    suits.         Count       4   charged      the    lawyer       defendants         and

Harron with common law civil conspiracy as to each of the nine

suits, and Counts 5 and 6 charged Gilkison and the Peirce firm

with     conspiracy         and     fraud       as    to    the       so-called       “May/Jayne

Incident,” infra.

        The    defendants         moved       pursuant     to     Federal      Rule    of       Civil

Procedure 12(b)(6) to dismiss Counts 1 through 4 and Count 6 of

the complaint.              The district court granted the motion in part

and denied the motion in part.                          As to the RICO counts, the

district court found that because “eight of the nine lawsuits

that comprise the basis of th[e] claims were filed more than

                                                 6
four years before CSX filed its amended complaint in this case,”

(J.A.    696),    and     “CSX      was    on     inquiry      notice   of        the    injuries

alleged in Counts 1 and 2 when the nine allegedly fraudulent

claims against it were filed and/or settled,” (J.A. 698), eight

of the claims were time-barred.                       As to the ninth suit, (the

“Baylor    suit”    on     behalf       of   Earl     Baylor),        the    district         court

reasoned    that        since    the      other     eight      RICO   claims           were   time-

barred,     and    because          proving       “[a]     ‘pattern         of    racketeering

activity’       requires        a      showing       of     at     least         two     acts     of

racketeering activity[,] . . . .                          CSX has failed to show the

requisite pattern to sustain its RICO claims.” (J.A. 699-700).

     As    to     the    common      law     fraud       and     conspiracy        counts,       the

district    court       held     that     “[t]he      foregoing       [RICO]           statute    of

limitations       analysis       similarly          applies      to   [those]          [c]ounts.”

(J.A. 700).        As a result, the district court concluded that,

“[b]ecause eight of the nine lawsuits . . . were filed more than

two years before the amended complaint was filed in this case,

reliance on those suits is time-barred” under West Virginia law.

(J.A. 700).       The Baylor suit was not time-barred but decided on

summary judgment as discussed below.

        The district court denied the motion to dismiss Count 6,

and the fraud and conspiracy claims arising from the May/Jayne

Incident proceeded to trial.

                                                7
       After    the     district     court’s      ruling     on    the    Rule       12(b)(6)

motion, CSX moved for leave to amend its complaint and proffered

a proposed second amended complaint, which “added [eleven] more

recent fraudulently filed claims as well as detailed allegations

concerning        the     difficulty         of        discovering            the     fraud.”

(Appellant’s Br. 13).          The district court denied the motion.

       CSX noted a timely appeal as to all its claims, and this

Court has jurisdiction over the appeal pursuant to 28 U.S.C. §

1291.

                                            II.

                                             A.

       CSX     first    contends      that       the     district       court       erred   by

granting the defendants’ motion to dismiss the RICO and common

law fraud counts.          CSX argues that this Court should adopt the

so-called       “separate      accrual           rule”     for     RICO        statute       of

limitations purposes, under which “a cause of action accrues

when new predicate acts occur within the limitations period,

even    if     other    acts   were      committed        outside       the     limitations

period.”       (Appellant’s        Br.     19)     (quotations          and     alterations

omitted).        CSX also asserts that the district court erred by

concluding      that     CSX   had    or     should      have     had    notice       of    its

injuries, for both the RICO and fraud counts, near the dates the

suits were filed and/or settled.                  CSX contends that the district

                                             8
court’s       “analysis      [on    this      point]        depended     upon     mistaken

assumptions about the materials to which CSX[] had access and

disregarded features of mass asbestos litigation that severely

limited CSX[]’s ability to discover the fraud.” (Appellant’s Br.

33).    Finally, CSX suggests that “a Rule 12(b)(6) motion may be

granted only in the unusual case in which all facts necessary to

the defense clearly appear on the face of the complaint,” and

that the case at bar does not meet that standard. (Appellant’s

Br. 14).

       We    review    the   district      court’s      grant       of   the    motion         to

dismiss the RICO and common law claims de novo. Monroe v. City

of   Charlottesville,        579    F.3d      380,    385    (4th    Cir.      2009).          In

reviewing the order, “we must take the facts in the light most

favorable      to    the   plaintiff.”        E.   Shore     Markets,     Inc.       v.    J.D.

Assocs. Ltd. P’ship, 213 F.3d 175, 180 (4th Cir. 2000).

                                    1. RICO Claims

       This Court has recognized that a “dismissal [pursuant to a

Rule 12(b)(6) motion] is inappropriate unless, accepting as true

the well-pleaded facts in the complaint and viewing them in the

light       most    favorable      to   the       plaintiff,     ‘it     appears          to   a

certainty      that    the   plaintiff        would    be    entitled     to    no    relief

under any state of facts which could be proved in support of his

claim.’” Brooks v. City of Winston-Salem, 85 F.3d 178, 181 (4th

                                              9
Cir. 1996) (quoting Mylan Lab., Inc. v. Matkari, 7 F.3d 1130,

1134 & n.4 (4th Cir. 1993)).              We have noted that asserting an

affirmative defense, like a statute of limitations defense, in a

motion to dismiss presents a particular “procedural stumbling

block” for defendants. Richmond, Fredericksburg & Potomac R.R.

v. Forst, 4 F.3d 244, 250 (4th Cir. 1993).                 Accordingly,

     a motion to dismiss filed under Federal Rule of
     Procedure 12(b)(6) . . . generally cannot reach the
     merits of an affirmative defense, such as the defense
     that the plaintiff’s claim is time-barred. But in the
     relatively rare circumstances where facts sufficient
     to rule on an affirmative defense are alleged in the
     complaint, the defense may be reached by a motion to
     dismiss filed under Rule 12(b)(6).      This principle
     only applies, however, if all facts necessary to the
     affirmative defense “clearly appear[] on the face of
     the complaint.”

Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 2007)

(quoting Forst, 4 F.3d at 250).                “To require otherwise would

require    a    plaintiff   to   plead    affirmatively       in    his   complaint

matters that might be responsive to affirmative defenses even

before the affirmative defenses are raised.” Id. at 466.

     The       Supreme   Court   has   held,   as    did    the    district     court

below,    that    the    applicable     statute     of   limitations      for   RICO

violations is four years. See Agency Holding Corp. v. Malley-

Duff & Assocs., Inc., 483 U.S. 143, 152 (1987).                      There is no

contest on this point, as the dispute in this case concerns when

the injury accrued, that is, when did the four year statute of

limitations begin to run.              See Brooks, 85 F.3d at 181.               This

                                         10
Court has held that “the statutory period [for a RICO claim]

begins to run when a plaintiff knows or should know of the

injury that underlies his cause of action.” Pocahontas Supreme

Coal Co. v. Bethlehem Steel Corp., 828 F.2d 211, 220 (4th Cir.

1987);    see       also   Rotella      v.     Wood,     528    U.S.    549,    555    (2000)

(“[D]iscovery of the injury . . . is what starts the clock.”).

       Having set out the applicable law, we turn to the complaint

to determine whether all the facts necessary to conclude CSX’s

claims are time-barred appear on its face.                            In that regard, we

note    the    complaint         was   filed    July     5,     2007,   so   the     specific

inquiry is whether the face of the complaint pleads facts such

that it clearly appears CSX was on notice of its claimed injury

by July 4, 2003.           We conclude a fair reading of the complaint’s

allegations does not establish such notice on the face of the

complaint and therefore the district court erred in granting the

Rule 12(b)(6) motion.

       The complaint alleges the following with respect to the

timing    of    the    RICO      violations:        in   December       2003,   Peirce       was

linked    to    a    union    president        who     had     pled   guilty    to    federal

racketeering charges; in 2007, Harron lost his medical license;

the    B-reads      for    the    underlying        lawsuits      ranged     from     2000    to

2003; the dates the underlying lawsuits were filed and settled,

ranging from 2000 to 2006; several specific alleged acts of mail

and wire fraud occurring since 2000; and allegations of civil

                                               11
RICO conspiracy beginning in “the early to mid 1990s.” (J.A.

163).     Viewed in the light most favorable to CSX, it is not at

all clear from these facts when CSX knew or should have known of

the alleged RICO violations, that is, when the fraud commenced.

       The district court, however, conflated the filing of the

various underlying suits as, in and of themselves, putting CSX

on notice of the fraudulent scheme underlying the RICO counts.

However, nothing “clearly appears” on the face of the complaint

to show that the filing of these suits by the lawyer defendants,

as well as the settlements, establish that CSX knew or ought to

have    known       by   July   2003     that      the    alleged        fraud   was     afoot.

Additional      factual         development        may    or       may    not    prove       that

premise, but it is not plainly apparent on the face of the

complaint.

       The case at bar is readily distinguishable from the rare

cases in which this Court has held the district court properly

dismissed,      pursuant        to   Rule     12(b)(6),        a    complaint      as     time-

barred.       In Brooks, we found that, because it was undisputed

that    the     relevant         charge      of     unlawful        warrantless          arrest

“accrue[s] on the date of . . . arrest,” the date of arrest was

included in the complaint, and because “[t]here is no question

that on the day of his arrest Brooks knew or should have known

both    of    the    injury     .    .   .   and    who    was     responsible         for   any

injury,” dismissal on a Rule 12(b)(6) motion was appropriate. 85

                                              12
F.3d at 182; see also McMullen v. Lewis, 32 F.2d 481, 484 (4th

Cir. 1929) (“Where upon the face of the bill the staleness of

the   demand       is     apparent—that         is,     the      claim   has     remained

unasserted for 50 years—the question of its antiquity can always

be called to the court’s attention . . . .                        [T]he laches of the

complainant in asserting his claim is a bar in equity, if that

objection is apparent on the bill itself, there can be no good

reason for requiring a plea or answer to bring it to the notice

of the court.” (quotations omitted)).

      In contrast to the foregoing cases in which the complaint

clearly identified the start date for the running of the statute

of limitations, the case at bar necessitates a fact-intensive

inquiry      as    to    when   CSX    knew     or    should      have   known    of   the

existence of the claimed RICO violations.                          The fact that an

underlying asbestos suit was filed or settled, without more,

does not establish as a matter of law that the separate gravamen

of RICO fraud should have been known by that event alone.                              The

district court thus erred in making the unilateral finding that

either    the     date    of    the    filing   or    of    the    settlement     of   the

underlying lawsuits was dispositive on this question.                            It does

not follow from the facts pled on the face of the complaint that

CSX   knew    or    should      have    known    that      the    underlying     asbestos

lawsuits were fraudulently filed when they were filed.                           Nor does

reading the face of the complaint show that CSX knew or should

                                           13
have known of the alleged fraudulent screening scheme when the

lawsuits were filed or settled.

       Accordingly, the case at bar does not qualify as one of the

“rare circumstances,” in which Rule 12(b)(6) dismissal of the

RICO claims as time-barred was appropriate.                        Thus, “we conclude

that       the     face        of     the    complaint    does    not      allege      facts

sufficiently clear to conclude that the statute of limitations

had run, and the district court therefore erred in dismissing

the    complaint          on     that       basis.”   Goodman,    494   F.3d      at    466.

Instead, we find that in this case “[t]h[is] defense[] [is] more

properly         reserved       for    consideration     on   a   motion    for     summary

judgment,” Forst, 4 F.3d at 250, and we vacate the district

court’s judgment in so far as it granted the motion to dismiss

Counts 1 and 2 of the complaint. 3

       3
        Because we find that the district court erred by
dismissing the RICO counts for the reasons just described, we do
not address CSX’s argument regarding the separate accrual rule
for RICO statute of limitations purposes.

     As a separate matter, since the issue may arise on remand,
we do note our concern regarding the district court’s apparent
alternate holding that, “[b]ecause only one alleged act of
racketeering activity is not time-barred, CSX has failed to show
the requisite pattern to sustain its RICO claims.” (J.A. 700).
While we have determined that, at the motion to dismiss stage,
the district court erred in finding the CSX claims time-barred,
some of those claims may yet be determined as time-barred at a
later stage of the proceedings.    However, even if a claim or
claims are found to be time-barred, that fact alone does not
make the claim ineligible as a predicate act to establish a RICO
pattern.

(Continued)
                                                 14
                     2. Common Law Fraud Claims

     Common law fraud under West Virginia law is the gravamen of

Counts 3 and 4 of the complaint.         West Virginia’s applicable

statute of limitations for such common law fraud claims is two

years.   See Alpine Prop. Owners Assoc., Inc. v. Mountaintop Dev.

Co., 365 S.E.2d 57, 66 (W. Va. 1987).         Similar to a RICO claim,

a West Virginia fraud claim accrues from “the perpetration of

the fraud,” or if “there has been fraudulent concealment,” then

“the statute begins to run only from the time when the wrong was

discovered,   or   ought   to   have   been    discovered.”   Plant   v.

Humphries, 66 S.E. 94, 98 (W. Va. 1909).

     Viewed in the light most favorable to CSX, the complaint

alleges the same facts as to the West Virginia common law fraud

counts as recounted above regarding the RICO counts.           For the

same reasons discussed above concerning the RICO counts, the

pled facts do not reveal when CSX knew or should have known of

the alleged fraud.    That is, the face of the complaint does not

     In order to demonstrate the requisite pattern of RICO
activity, the statute permits the contemplation of acts within a
ten year period. 18 U.S.C. § 1961(5). Thus, even assuming that
only one of those acts occurred within the statute of
limitations period, that would not defeat the existence of a
RICO pattern provided the other predicate act took place within
the applicable ten year period.    Whether all of the injuries
might independently support an award of damages is a separate
issue.

                                  15
plead    facts    which      conclusively       show    CSX    knew       or    should    have

known of the alleged fraud by July 4, 2005, two years prior to

the filing of the complaint.

       Our analysis of the error in the district court’s dismissal

of CSX’s RICO claims likewise applies to its dismissal of the

common law fraud claims.               Accordingly, because the face of the

complaint       does    not    allege     sufficient      facts          to    conclusively

determine when CSX knew or should have known of the existence of

the    common    law    fraud,    the    district       court    erred          by    granting

defendants’ Rule 12(b)(6) motion to dismiss Counts 3 and 4 of

the complaint.

                                           B.

       CSX     next    contends    that     the    district          court      abused     its

discretion       by    denying    the    motion    to     file       a    second       amended

complaint.       In denying leave to amend, the district court found

“that CSX was dilatory in filing this motion for leave” and

“[m]oreover, this Court finds that CSX’s proposed amendment to

the complaint would be futile.” (J.A. 791).                           Referring to its

earlier decision that the RICO and common law fraud claims were

time-barred,      the     district      court    stated       “CSX       is    charged    with

notice    of    its    injury     by    March    2000    when    the          first    alleged

objectively baseless and fraudulent lawsuit was filed against

it,”    and    thus    the    additional    claims       in    the       proposed       second

                                           16
amended complaint would likewise be time-barred. (J.A. 792-93).

Because the district court found that amendment would be futile,

it also observed that “allowing CSX to file a second amended

complaint    would      unduly    prejudice      the    defendants    by    extending

discovery when it is not necessary.” (J.A. 795).                       The district

court made no finding that CSX acted with a dilatory motive or

that   being     dilatory      alone    would    cause    any     prejudice   to    the

defendants.

       Because    CSX    contends      that     the    district    court    erred   in

dismissing       its    RICO    and    fraud     claims    as     time-barred,      CSX

correspondingly argues that amendment of the complaint would not

have been futile.         This is so, CSX argues, because of the seven

additional     claims     in     the   proposed       second    amended    complaint,

“[o]ne . . . was filed in the same lawsuit as the Baylor claim

(as to which the district court found no time bar); three were

filed after the Baylor claim (and thus necessarily raise no time

bar); and three were filed in the same lawsuit as the Peterson

and Wiley claims (as to which discovery commenced less than four

years before CSX[] filed its RICO claims).” (Appellant’s Br. 34-

35).      Accordingly,         CSX     avers    that     the    additional     claims

proffered in the second amended complaint were not time-barred.

       This Court reviews a district court’s denial of leave to

amend for abuse of discretion. United States ex rel. Wilson v.

Kellog Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir. 2008).

                                          17
      Leave to amend “should freely [be given] when justice so

requires.” Fed. R. Civ. P. 15(a)(2).                 Thus, “[i]n the absence of

any apparent or declared reason—such as undue delay, bad faith

or dilatory motive on the part of the movant, repeated failure

to   cure    deficiencies         by   amendments    previously       allowed,   undue

prejudice to the opposing party by virtue of allowance of the

amendment, futility of amendment, etc.—the leave sought should,

as the rules require, be ‘freely given.’” Foman v. Davis, 371

U.S. 178, 182 (1962).

      The district court’s finding that amendment would have been

futile followed solely from its earlier holding in granting the

motion    to      dismiss   the    RICO   and   fraud      counts    as   time-barred.

From that basis the district court reasoned that the additional

claims      must    likewise      be    time-barred.         However,     because   we

determined above that the district court erred by dismissing

CSX’s RICO and common law fraud claims in the complaint as time-

barred,      it    axiomatically        follows     that    the     district   court’s

finding of futility based on the later, additional claims was

erroneous and thereby an abuse of discretion as a matter of law. 4

      4
       The record supports the district court’s finding that CSX
was dilatory in offering its second amended complaint. CSX had
access to the information about the additional eleven asbestos
cases it now claims were fraudulent when it filed the complaint,
but, for whatever reason, did not include those claims.
However, there is no evidence that CSX’s delay was in bad faith
and, more importantly, “[d]elay alone, without prejudice, does
(Continued)
                                           18
See Koon v. United States, 518 U.S. 81, 100 (1996) (“A district

court by definition abuses its discretion when it makes an error

of law.”).

        Likewise, the district court’s finding that amendment would

be unduly prejudicial to the defendants was based solely on its

finding    that   the    additional          claims    would    be    futile.        The

district court found that the defendants would be prejudiced

because    amendment     would     “extend[]      discovery      when    it     is   not

necessary,” (J.A. 795), based only on its conclusion that the

additional claims were time-barred.                   Because the district court

erred     in    its     futility       determination,          and    because        that

determination directly informed the court’s unduly prejudicial

determination, the court’s unduly prejudicial determination must

also    fail.     Accordingly,         the    district    court’s      finding       that

amendment would be unduly prejudicial to the defendants was also

an abuse of discretion.

       Therefore, we find the district court abused its discretion

by   denying    the   motion     for    leave     to    amend   and    the    district

court’s judgment to that effect is hereby vacated.

not support the denial of a motion for leave to amend.” Deasy v.
Hill, 833 F.2d 38, 41 (4th Cir. 1987).     Without a finding of
dilatory motive and prejudice, the district court’s finding that
CSX acted in a dilatory manner is an insufficient ground upon
which to deny the motion to amend.

                                             19
                                        C.

    CSX next argues that the district court erroneously granted

summary judgment to the defendants in the Baylor suit.                       In its

award of summary judgment, the district court found that “[t]he

undisputed     facts    show     that     CSX     cannot     produce        evidence

sufficient for a reasonable jury to find that CSX relied upon

the defendants’ alleged fraudulent act.” (J.A. 2091).                        In the

district   court’s     view,    “there       remains   no   evidence     that    the

lawyer defendants knew that Mr. Baylor did not have asbestosis,”

because    “CSX,      itself,    admits        that    ‘a    B     reader       could

hypothetically undertake to review the 2003 x-ray and believe in

good faith that they [sic] find [signs of asbestosis].’” (J.A.

2092).

     CSX offers three contentions for reversal of the grant of

summary judgment:

     First, the positive x-ray reading resulted from an
     unreliable screening mechanism designed by the lawyer
     defendants to generate false positives.    Second, the
     lawyer defendants failed to conduct a reasonable
     inquiry before filing suit, and thus failed to uncover
     medical records in their own files that effectively
     ruled out asbestosis.   Third, the only evidence that
     Baylor had been exposed to asbestos while working for
     CSX[]   was  a   questionnaire  that   Baylor  himself
     confirmed was fabricated.

(Appellant’s    Br.    39-40)    (emphasis      deleted).         If   we    assume,

without    deciding,    that    sufficient        evidence       was   before     the

district court so as to permit summary judgment on the first two

                                        20
issues, there clearly were material facts in dispute as to the

last issue.

      This     Court    reviews     a   district       court’s        grant       of    summary

judgment de       novo.      Shipbuilders        Council    of   Am.        v.    U.S.       Coast

Guard, 578 F.3d 234, 243 (4th Cir. 2009).

      “Summary judgment is only appropriate ‘if the pleadings,

the     discovery      and    disclosure         materials       on     file,          and     any

affidavits      show    that    there    is      no   genuine         issue       as    to    any

material fact and that the movant is entitled to judgment as a

matter of law.’” George & Co. v. Imagination Entm’t Ltd., 575

F.3d 383, 392 (4th Cir. 2009) (quoting Fed. R. Civ. P. 56(c)).

“We construe the evidence in the light most favorable to . . .

the party opposing [the] summary judgment motion, and draw all

reasonable inferences in its favor.” Id.

      In order to make a prima facie claim for injuries arising

from asbestosis, not only must the plaintiff plead and show that

he has asbestosis, but “the threshold for every theory is [also]

proof    that     an    injured     plaintiff         was   exposed          to    asbestos-

containing      products      for   which     the     defendant        is    responsible.”

Blackston v. Shook & Fletcher Insulation Co., 764 F.2d 1480,

1481 (11th Cir. 1985); see also Marlin v. Bill Rich Const.,

Inc., 482 S.E.2d 620, 635 (W. Va. 1996) (“[I]nhaling asbestos

fibers    or    other     dustborne     particles         does   not        constitute         an

injury    under     [West      Virginia’s        worker     compensation           statute],

                                            21
absent the further showing that occupational pneumoconiosis has

been contracted after exposure . . . .”).                               Thus, to make out a

claim of injury from asbestosis, counsel must plead not only

that the claimant has the disease, but the additional element of

exposure          to     asbestos          while         working   for        the     defendant.

“[R]ecovery            will    require       the    plaintiff      to    show       that    he   was

exposed      to    defendant’s          asbestos-containing             product      by    working

with or in close proximity to the product.” Blackston, 764 F.2d

at 1481; see also Restatement 2d Torts § 431(a).                                      It follows

that if the evidence could reasonably show that a lawyer filed

an asbestos claim knowing the necessary element of occupational

exposure did not exist, a reasonable jury could conclude that to

be an act of fraud.                   Of course, fraud is the gravamen of the

claim by CSX against the defendants in the Baylor suit.

      Even if we assume, as the lawyer defendants argue and the

district court held, that CSX could not show the defendants did

not   know    Baylor          did    not     have    asbestosis,        that    assumption       is

insufficient to support the grant of summary judgment.                                     This is

because      material          facts       remain    in     dispute     as    to    whether      the

lawyer defendants committed fraud in their representation that

the   necessary           element       of    occupational         exposure         was    met   in

Baylor’s case.

      After Breyer confirmed Harron’s reading of Baylor’s x-ray,

the    Peirce           firm        sent     Baylor        a   copy      of     an        “Asbestos

                                                    22
Questionnaire”      with       directions     to    complete    the   questionnaire,

although      someone     at    the    Peirce      firm   had   already    “partially

completed” it. (J.A. 92).              In the response to a section of the

questionnaire entitled “Claimed Exposures,” the terms “Asbestos

rope, cement, Asbestos valve packing” are written. (J.A. 93). 5

The foregoing writing appears to be in handwriting different

from   that    on   the    remainder     of      the   questionnaire,      and    Baylor

testified that it was “not [his] writing.” (J.A. 1199).                          He also

testified that it was “not [his] wife’s writing,” (J.A. 1199),

and responded “[n]o” when he was asked “whether someone [from

the Peirce firm] might have asked you questions and wrote things

on this form while . . . you were sitting there?” (J.A. 1204).

Moreover, Baylor testified that while employed by CSX he did not

work with any asbestos rope or with any cement products.                          If the

jury believed this evidence, it could reasonably conclude the

lawyer defendants committed an act of fraud by falsifying the

occupational exposure required as a necessary element of the

asbestos claim they filed.               Obviously, CSX would have “relied”

on   the   representation         by    filing      the   Baylor   claim    that     all

elements of the cause of action were met as CSX would have had

no reason to know of the alleged act of fraud.

       5
        Additional information is written in that section;
however, the rest of the response does not allege any asbestos
exposure.

                                            23
     Thus, viewing the evidence in the light most favorable to

CSX, a reasonable jury could find that the lawyer defendants at

worst    fraudulently        manufactured       the   claimed    exposures,   or   at

least lacked a good faith basis to file an asbestos injury claim

because    they       knew     it    lacked      the    necessary       element    of

occupational exposure.          Consequently, a jury could find that the

lawyer defendants committed fraud by filing the lawsuit because

there was no evidence upon which they could have believed that

Baylor was exposed to asbestos-containing products in the course

of his employment with CSX.                Consequently, a reasonable jury

could    find   CSX    relied       to   its    detriment   on    the   defendants’

alleged fraud as the basis of the Baylor claim. 6

     Accordingly, because material facts remain in dispute, we

reverse the district court’s award of summary judgment to the

defendants in the Baylor case. 7

     6
       Harron contends an independent basis (Breyer’s B-read of
Baylor’s x-ray) exists to sustain the award of summary judgment
as to him. We disagree. From the record evidence, a reasonable
jury could conclude Harron falsely certified Baylor’s x-ray and
that Breyer was also involved in a similar scheme particularly
if the jury found Breyer’s B-read came after receiving Harron’s
previous diagnosis.   Thus, material facts remain in dispute as
to Harron which preclude summary judgment upon the current
record.
     7
       We have reviewed defendants’ arguments that alternative
grounds exist for the district court’s grant of summary judgment
and have found all of them to be without merit.     This finding
includes, but is not limited to, the defendants’ argument that
CSX’s fraud claim is barred by the Noerr-Pennington doctrine.
(Continued)
                                           24
                                              D.

       The   fraud      and   conspiracy       claim       that   proceeded      to    trial

arose from CSX’s allegation of Gilkison’s and, vicariously, the

Peirce firm’s participation in the so-called May/Jayne Incident.

This      case    involved       two    prior        CSX    employees:     Danny       Jayne

(“Jayne”) and Ricky May (“May”).                      Jayne had “attended and was

examined at a screening for asbestosis conducted by the Peirce

firm,” and his x-ray was read by Harron as having irregularities

“consistent with asbestosis.” (J.A. 166).                         As a result of this

diagnosis,        the   Peirce    firm       filed    a    personal     injury    suit   on

Jayne’s      behalf     against        CSX    in     2000,      which   was   ultimately

settled.

       CSX alleged that, subsequently, Gilkison “suggested to . .

.   May    that    he   should    get    someone          who   had   previously      tested

positive for asbestosis to sit for his exam,” so that he would

“be able to file a claim against CSX.” (J.A. 167).                               May asked

Jayne to appear at an asbestosis screening and represent himself

As the district court found, “CSX’s amended complaint contains
sufficient allegations to support the sham exception,” (J.A.
703), and the record has sufficient evidence to support that
finding.    Moreover, the defendants have not challenged the
district court’s finding of fact by cross appeal.             The
defendants also contend a release by Baylor forecloses a claim
by CSX related to him.     However, the district court has not
considered this ground and has made no factual findings which
would be a necessary condition precedent to appellate review.

                                              25
to be May, which Jayne did.            The resulting x-ray was later

“presented to CSX[] on behalf of . . . May by the Peirce firm as

part of a settlement package.” (J.A. 170).

      At trial, May testified that “the idea” to “ask[] someone

else to sit on [his] behalf . . .           came from . . . Gilkison.”

(J.A. 1622).     Jayne testified that May “called [him] and asked

[him] to attend a screening and sit in his place and pretend[]

that [he was] May so that he could obtain a positive screening,”

and that May had told him that the suggestion for the scheme

originated with Gilkison. (J.A. 1720).          Gilkison denied that he

was   either   the   mastermind   or   a   participant    in   the   scheme.

Peirce testified that he had no knowledge of the scheme before

or during the time it was executed, and after he discovered the

fraud, he told May “he is no longer our client and he better get

a lawyer to defend himself on the allegations that CSX had made.

I wanted nothing to do with him at that point . . . .” (J.A.

1544).

      During trial, CSX attempted to introduce evidence that the

Peirce firm had continued to represent May after the incident in

various personal injury matters against third parties other than

CSX   (hereinafter   “third   party    claims”).    The    district   court

granted the defendants’ motion to exclude that evidence, finding

that “what actions the Peirce Law Firm did with regard to those

other [third party claims] seems to me to be irrelevant in the

                                      26
first place under 401 and probably confusing to the jury and

unfairly prejudicial.” (J.A. 1323).                 Later, the district court

again found that “the third-party issues, which are described as

such which really involve claims that May had or may have had

against other asbestos manufacturers and possibly other related

parties, is not relevant to the claim of CSX against Gilkison

and Peirce for their damages for the fraud.” (J.A. 1560).

       On appeal, CSX argues that the evidence was “manifestly

relevant”   under   Rule      401   because    it    “directly   contradict[ed]

Peirce’s testimony” and “made it more likely that the fraud was

a calculated scheme by Gilkison and the Peirce firm to generate

revenue for the firm and assist May.” (Appellant’s Br. 56-57).

CSX    contends   that   the    evidence      was    particularly     significant

because   “the    case   ultimately     came    down    to   whether    the   jury

believed May and Jayne, on the one hand, or Gilkison and Peirce,

on the other.” (Appellant’s Br. 59).

       This court reviews the district court’s decision to exclude

this   evidence    for   an    abuse   of   discretion.      United    States   v.

Blake, 571 F.3d 331, 350 (4th Cir. 2009).

       “To be relevant, evidence need only to have ‘any tendency

to make the existence of any fact that is of consequence to the

determination of the action more probable or less probable than

it would be without the evidence.’” United States v. Aramony, 88

F.3d 1369, 1377 (4th Cir. 1996) (quoting Fed. R. Evid. 401).

                                       27
However, relevant evidence “must be excluded if its probative

value      is     substantially         outweighed        by     the     danger       of    undue

prejudice,” which occurs when “there is a genuine risk that the

emotions of a jury will be excited to irrational behavior, and

that this risk is disproportionate to the probative value of the

offered evidence.” Id. at 1378 (quotations omitted).

      Because the district court has first-hand knowledge of
      the trial proceedings, we have consistently held that
      the   district   court   should   be   afforded  ‘wide
      discretion’ in determining whether evidence is unduly
      prejudicial and that the district court’s evidentiary
      determinations should not be overturned “except under
      the most extraordinary of circumstances.”

Id. at 1377 (quoting United States v. Heyward, 729 F.2d 297, 301

n.2 (4th Cir. 1984)).

      We        find    that    the     district         court     did    not     abuse          its

discretion by excluding the evidence.                           First, the evidence was

not   clearly          impeaching,      as   it     was    consistent          with    Peirce’s

testimony        that     the    Peirce      firm       ceased    representing             May    on

asbestos matters against CSX after Peirce discovered the fraud.

Evidence        that    the    Peirce    firm     continued       to     represent         May    in

actions     against        other      parties      is     not    contrary       to     Peirce’s

testimony.             Thus,    Peirce’s      credibility         is     not    called        into

question by the evidence.

      Furthermore, Peirce’s testimony was not at all conclusive

on the issue of Gilkison’s guilt.                       Because CSX’s allegations as

to the Peirce firm’s liability were premised on a theory of

                                              28
vicarious liability, and not on any direct actions on the part

of the Peirce firm, the evidence is not particularly relevant.

Therefore, the district court did not abuse its discretion by

finding that the possible confusion to the jury and prejudice to

the defendants outweighed any marginal relevance the evidence

may have had.

                                                III.

       For the foregoing reasons, we affirm the district court’s

judgment      regarding            the    May/Jayne      Incident.         We    vacate   the

district court’s judgment granting the motion to dismiss as to

Counts    1     through        4.         We   also    vacate     the    district     court’s

judgment      denying         the    motion     by     CSX   to   amend    its    complaint.

Finally,        we        vacate    the    district      court’s        grant    of   summary

judgment to the defendants on the Baylor claim.                                 Accordingly,

this     case        is     remanded      to    the    district     court       for   further

proceedings in accordance with this opinion.

                                                                         AFFIRMED IN PART,
                                                                          VACATED IN PART,
                                                                              AND REMANDED

                                                 29
DAVIS, Circuit Judge, concurring:

     I concur fully in the panel opinion and in the disposition

of this appeal. I write separately to express some lingering

reservations     regarding       our     vacatur    of      the    district    court’s

summary judgment on the Baylor claim.

     In   West   Virginia,       as    elsewhere,      a    plaintiff       must   prove

fraud by clear and convincing evidence. See, e.g., Bowling v.

Ansted Chrysler-Plymouth-Dodge, Inc., 425 S.E.2d 144, 148 (W.Va.

1992); White v. National Steel Corp., 938 F.2d 474, 490 (4th

Cir. 1991). While the uncertainty surrounding the unidentified

handwriting    on    Baylor’s     Asbestos     Questionnaire          may    present   a

factual issue, I have grave doubt that any reasonable resolution

of that uncertainty is sufficient on this record to show fraud

on the part of the lawyer defendants in light of the heightened

burden of proof West Virginia law imposes on plaintiffs. It is

far from obvious that a reasonable jury could find, by clear and

convincing evidence, that the lawyer defendants committed fraud

in “representing” that Baylor had been exposed to asbestos.

     CSX argues that a fabricated Questionnaire is “compelling

evidence”   that     Baylor’s      exposure     history       was    falsified      and,

thus,     evidence        that     the       lawyer        defendants         knowingly

misrepresented this fact in support of his claim when they filed

suit on Baylor’s behalf against CSX. The record shows that the

Questionnaire       was   not    completed     until       2005,    two   years    after

                                          30
Baylor’s       initial        screening.          J.A.       92-95,      1154,        1157.    The

Questionnaire         alone,       created    after      the       lawyer     defendants        had

opened a file for Baylor on the basis of his work and medical

history,       seems    insufficient         to     show      by    clear    and      convincing

evidence that the individual lawyer defendants knowingly filed

Baylor’s claim on the basis of a factual allegation they knew to

be false. This is all the more so given the evidence in the

record     supporting            Baylor’s     exposure            history.       According      to

evidence in the record, brake exposures to track men (Baylor’s

position) were “certainly a possible source of exposure.” J.A.

1195.    As    this     court      has     previously         noted,     “[f]raud        ‘is   not

deducible from facts and circumstances which would be equally

consistent       with       honest      intentions.’”         White,       938    F.2d    at    491

(citing    Steele       v.       Steele,    295     F.Supp.        1266,     1269     (S.D.W.Va.

1969)).

       Furthermore, even if one assumes that CSX has projected

evidence       sufficient          to     establish,         by    clear     and      convincing

evidence, a material misrepresentation, it is highly doubtful

that     CSX    can      show       its     reasonable            reliance       on    any     such

misrepresentation. CSX claims that there “can be no question

that . . . CSX[] relied on that misrepresentation by treating

the claim like every other one in the mass asbestos docket.”

Appellant’s       Br.       at    48.     However,       a    successful         fraud       action

requires       that     a    plaintiff       not     only         have   “relied       upon    the

                                               31
misrepresentation,” but to have been “justified in relying upon

it.” Martin v. ERA Good fellow Agency, Inc., 423 S.E.2d 379, 381

(W.     Va.    1992)    (emphasis      added).       Here,      Baylor’s     underlying

damages       claim    was   based    on     allegations        in   a   civil    lawsuit

against CSX. As the defendant in that suit, CSX had the ability,

and   its     lawyers    had   a     duty,    to    access,      examine,       and    where

appropriate, contest the other side’s evidence, including, as

here,    evidence       with   respect       to    the    sufficiency      of    Baylor’s

asbestosis claim. Instead, CSX’s claim here, that it was damaged

by its (ostensibly reasonable) reliance on a misrepresentation

regarding Baylor’s workplace exposure, appears to turn on its

head the very adversarial regime that is one of the hallmarks of

our system of civil justice. One is left to ponder how a party

represented      by    capable     counsel        might   reasonably      rely        on    the

allegations made on behalf of its adversary.

      I note, as well, that to the extent CSX rests its claim for

fraud on the lawyer defendants’ alleged “misrepresentation” of

their “good-faith basis” for filing the Baylor claim, this court

received no coherent answer at oral argument to its question

seeking the source of any such duty under West Virginia law. CSX

appears to rely for this proposition on West Virginia Rule of

Civil     Procedure      11(a).      Appellant’s          Br.    39.     However,          West

Virginia courts have noted that “[t]he purpose of Rule 11 and

Rule 37 of the West Virginia Rules of Civil Procedure is to

                                             32
allow trial courts to sanction parties who do not meet minimum

standards of conduct in a variety of circumstances.” Davis ex

rel.   Davis     v.    Wallace,        565   S.E.2d      386,   389    (2002)     (citing

Bartles v. Hinkle, 472 S.E.2d 827, 835 (1996)). Accordingly,

CSX’s claims for fraud on the basis of this rule appear plainly

unfounded. As has long been true of the corresponding federal

rule, a private cause of action may not be based on this rule of

procedure. See, e.g., Port Drum Co. v. Umphrey, 852 F.2d 148,

148-49    (5th        Cir.     1988)     (“Under        [plaintiff’s]        unique   and

imaginative theory, injured third parties derive from Rule 11 a

private cause of action to enforce an attorney's professional

duties . . . . [W]e reject this novel legal argument.”). As we

have analogously observed, “[c]ourts have consistently refused

to use ethical codes to define standards of civil liability for

lawyers.”   Schatz       v.     Rosenberg,        943   F.2d    485,   492    (4th    Cir.

1991), cert. denied sub. nom. Schatz v. Weinberg and Green, 503

U.S. 936 (1992).

       Notwithstanding         my    lingering     misgivings,        for   the   reasons

described   in    the        panel   opinion,      I    am   content   to    remand   the

Baylor claim to the district court so that the above issues

might have a proper airing.

                                             33