Hargraves v. Capital City Mortg. Corp.
| Decision Date | 29 September 2000 |
| Docket Number | No. CIV. A. 98-1021 (JHG).,CIV. A. 98-1021 (JHG). |
| Citation | 140 F.Supp.2d 7 |
| Parties | Clyde HARGRAVES, et al., Plaintiffs, v. CAPITAL CITY MORTGAGE CORP., et al., Defendants. |
| Court | U.S. District Court — District of Columbia |
Sheldon, Baach, Robinson & Lewis, John Peter Relman, Relman & Associates, Washington, DC, Kurt Hirsch, Jellyvision, Chicago, IL, for Clyde Hargraves, Erlinda Cooper, Greater Little Ark Baptist Church, Nancy Hilliard, Angela Birth, Fair Housing Council of Greater Washington.
Richard Ritter, Lars T. Waldorf, Washington Lawyers' Committee for Civil Rights, Jeffrey David Robinson, Duane Kenneth Thompson, Elizabeth Torrant Sheldon, Baach, Robinson & Lewis, Kurt Hirsch, Jellyvision, Chicago, IL, for Walter Jamison, Sr.
Christopher Schwartz, Holland & Knight, L.L.P., Rena Karen Schild, Philip Michael Musolino, Musolino & Dessel, Eric Jerome Sanne, Leticia Maria Watson, Washington, DC, Capital City Mortgage Corporation, for Capital City Mortgage Corporation and Thomas K. Nash.
Richard Ritter, Lars T. Waldorf, Washington Lawyers' Committee for Civil Rights, Jeffrey David Robinson, Duane Kenneth Thompson, Elizabeth Torrant Sheldon, Baach, Robinson & Lewis, John Peter Relman, Relman & Associates, Washington, DC, for Sylvia Robinson.
Bradley H. Blower, Federal Trade Commission, Washington, DC, for Federal Trade Commission.
Michelle Aronowitz, Department of Justice, Washington, DC, for United States of America.
Defendants Capital City Mortgage Corporation ("Capital City") and Thomas K. Nash ("Nash") have moved for judgment on the pleadings, or, in the alternative, for summary judgment, on ten of the eleven counts brought in the first amended complaint. In response, plaintiffs have filed an opposition, and pursuant to this Court's March 14, 2000 Order, the United States has filed a brief as amicus curiae, addressing defendants' motion. In addition, defendants have filed motions to sever the claims and hold separate trials, to transfer this case to the United States District Court for the District of Maryland, and to preclude one of the plaintiffs from offering evidence of emotional distress. The motion for summary judgment is denied in part and granted in part, and the other three motions are denied.
The plaintiffs allege that the defendants have engaged in a pattern or practice of predatory and racially discriminatory lending in the Washington, D.C. metropolitan area. Capital City is a Maryland corporation with its principal place of business in the District of Columbia, which makes and services loans. Nash is Capital City's president, and, through Mortgage Banking Trust, wholly owns Capital City. Specifically, plaintiffs allege violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c), (d), & § 1964(c) (2000), the Fair Housing Act ("FHA"), 42 U.S.C. § 3604(a) & (b), 3605(a)-(b)(1) & (b)(2) (1994), the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. § 1691(a) (1998), civil rights violations under 42 U.S.C. § 1981 & § 1982 (1994), unfair and deceptive lender practices, D.C.Code § 28-3312 (1996), fraud, and breach of contract.1
The plaintiffs' claims are based on allegations of ongoing illegal and discriminatory activity, particularly with regard to four loans made by the defendants to the plaintiffs. Defendants' loan to the Greater Little Ark Baptist Church ("Greater Little Ark"), which was secured by the building where the church held services, was executed on June 9, 1990. Greater Little Ark was evicted in March, 1995. In addition to Greater Little Ark, the church's pastor Clyde Hargraves ("Hargraves"), and the financial secretary and member of its board of trustees, Erlinda Cooper ("Cooper"), are plaintiffs in this action (collectively referred to as "the Greater Little Ark plaintiffs"). In 1995, plaintiffs Nancy Hilliard and her daughter Angela Birth ("Birth") received a loan from the defendants to purchase a church, and pledged their home as collateral for the loan. Hilliard and Birth both entered bankruptcy, and are behind on their loan payments.2 Walter Jamison ("Jamison") received a loan which was executed on or about April 17, 1991, secured by the building which housed his convenience store and two residential units. Sylvia Robinson ("Robinson") purchased residential property from the defendants. Settlement was on March 20, 1996. The eighth and final plaintiff is the Fair Housing Counsel of Greater Washington, Inc. ("FHC"). FHC alleges that the defendants' practices have caused FHC to devote its scarce resources to the investigation of defendants' lending and foreclosure activities, as well as to outreach, education, and enforcement efforts regarding the defendants' activities. Collectively, the plaintiffs allege that the defendants have engaged in "reverse redlining," targeting African-American communities with predatory lending practices. Individually, each plaintiff alleges injury from those practices.
In support of their motion for summary judgment defendants have submitted a Statement of Material Facts As To Which There Is No Genuine Issue ("Defendants' Statement"), and plaintiffs have filed a Statement of Material Facts and Facts In Dispute ("Plaintiffs' Statement").3 Because the defendants have relied on matters outside the pleadings, the motion shall be treated as a motion for summary judgment. See Fed. Rule Civ. P. 12(c). As such, defendants have the burden to establish that the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact," and that they are entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c). Defendants will only be entitled to summary judgment "If the record, viewed in the light most favorable to the nonmoving party, reveals that there is no genuine issue as to any material fact." Aka v. Washington Hospital Center, 156 F.3d 1284, 1288 (D.C.Cir.1998).
The defendants argue that, under the applicable statutes of limitations, all of the FHA and ECOA claims are barred the section 1981 and section 1982 claims are barred as to all plaintiffs except Robinson, and Jamison and the Greater Little Ark plaintiffs' RICO claims are barred.
The statute of limitations applicable to RICO claims is four years. See Agency Holding Corp. v. Malley-Duff & Assoc. Inc., 483 U.S. 143, 107 S.Ct. 2759, 97 L.Ed.2d 121 (1987). The original complaint was filed on April 24, 1998, therefore Jamison and the Greater Little Ark plaintiffs' claims will be barred if they accrued prior to April 24, 1994. Defendants argue that a RICO claim accrues at "the earliest time at which plaintiff could have maintained an action on the merits," and cite Riddell v. Riddell Washington Corp., 866 F.2d 1480 (D.C.Cir.1989), as support for that premise. Plaintiffs contend that the "discovery rule" applies, and thus their claim accrues when they knew, or should have known, of their injury.
The question of when a RICO claim accrues has not been definitively settled. The "last predicate act" rule was rejected in Klehr v. A.O. Smith Corp., 521 U.S. 179, 117 S.Ct. 1984, 138 L.Ed.2d 373 (1997), and the "injury and pattern discovery rule" was rejected in Rotella v. Wood, 528 U.S. 549, 120 S.Ct. 1075, 145 L.Ed.2d 1047 (2000). However, the latter case left open the question of whether a discovery rule, or a straight injury occurrence rule, applies to RICO claims. The District of Columbia Circuit similarly declined to resolve that question in Riddell, 866 F.2d at 1489-90. However, a number of circuits have applied a "discovery rule" to RICO claims, including the Fifth Circuit in the Rotella case, and the Court will assume for the purposes of this opinion that the discovery rule applies. See, e.g., Grimmett v. Brown, 75 F.3d 506 (9th Cir.1996), cert. dismissed as improvidently granted, 519 U.S. 233, 117 S.Ct. 759, 136 L.Ed.2d 674 (1997); McCool v. Strata Oil Co., 972 F.2d 1452 (7th Cir.1992); Rodriguez v. Banco Central Corp., 917 F.2d 664 (1st Cir.1990); Bankers Trust Co. v. Rhoades, 859 F.2d 1096 (2d Cir.1988); Pocahontas Supreme Coal Co. v. Bethlehem Steel Corp., 828 F.2d 211 (4th Cir.1987).
Plaintiffs contend that the defendants fraudulently concealed material facts related to the wrongdoing. If plaintiffs can make a showing of fraudulent concealment, the cause of action will be deemed "not to have accrued during the period of concealment — unless the defendant shows that the plaintiff would have discovered the fraud with the exercise of due diligence." Sprint Communications Co., L.P. v. Federal Communications Comm'n, 76 F.3d 1221, 1226 (D.C.Cir.1996). Whereas the plaintiffs' being on "inquiry notice" is enough to satisfy the discovery rule in normal cases, "something closer to actual notice" is required to set the statute of limitations in motion in a case involving fraudulent concealment. Id.
The Amended Complaint ("complaint") does contain an allegation that the defendants "concealed the pattern of racketeering," and the plaintiffs attached supporting declarations to their opposition to defendants' summary judgment motion. Hargraves and Cooper declared that by April 28, 1994, they remained unaware of the defendants' racketeering activities, and unaware that their injuries arose out of such activities. Jamison declared that he did not know that the defendants discriminated on the basis of race until May 1996, when a series of articles about the defendants was published in the Washington Post....
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