Tanaka v. First Hawaiian Bank, No. Civ. 96-00734SPK.

• Decision Date: 11 July 2000
• Docket Number: No. Civ. 96-00734SPK.
• Citation: 104 F.Supp.2d 1243
• Parties: Yoshitaro K. TANAKA, Plaintiff, v. FIRST HAWAIIAN BANK, et al., Defendants.
• Court: Hawaii Supreme Court

104 F.Supp.2d 1243

Yoshitaro K. TANAKA, Plaintiff, v. FIRST HAWAIIAN BANK, et al., Defendants.

No. Civ. 96-00734SPK.

United States District Court, D. Hawai`i.

July 11, 2000.

Gerald Brooks, Honolulu, HI, for plaintiff.

Gregory Tom, Watanabe Ing & Kawashima, Honolulu, HI, for defendant, third-party plaintiff.

Sidney Ayabe, Ayabe Chong Nishimoto Sia & Nakamura, Honolulu, HI, for defendant, fourth-party defendant.

Randolph Slaton, Honolulu, HI, for third-party defendant and fourth-party plaintiff.

ORDER DENYING MOTIONS FOR PARTIAL SUMMARY JUDGMENT

SAMUEL P. KING, District Judge.

INTRODUCTION

This is a factually and legally complicated case. The motions before the Court involve tricky and evolving concepts regarding, among other things, accrual of federal civil RICO claims. Defendant Roy Kodani, joined by Defendant First Hawaiian Bank, filed (1) a Motion for Partial Summary Judgment (on the RICO Count of the First Amended Complaint) and (2) a Motion for Summary Judgment against Fourth-Party Plaintiff Micki Ikuko Date (on Date's malpractice Count). After the matters were argued, two sets of supplemental briefs were filed. For the reasons set forth, the Motions are DENIED. This Order, however, details specific threshold questions of fact regarding application of statutes of limitation.

BACKGROUND

This civil RICO and fraud case stems from a dispute over the estate of the late Yoshio Tanaka, who died in 1987. Yoshio Tanaka's son, Yoshitaro, filed this action on September 4, 1996, against First Hawaiian Bank ("FHB") and attorneys Roy Kodani and Koji Takeuchi. Takeuchi was defaulted earlier. Among other things, Yoshitaro's suit alleges federal civil RICO violations and legal malpractice. In turn, FHB filed a third-party complaint against Yoshio Tanaka's ex-wife Micki Ikuko Date, who is Yoshitaro's mother. Date then filed affirmative claims against FHB and Kodani on March 7, 1997. Thus, Kodani faces claims from Yoshitaro (on the original complaint) and Date (on the 4th-party complaint). Similarly, FHB faces claims from Yoshitaro (on the original complaint) and Date (on counterclaims to FHB's third-party complaint).

The Court will sometimes refer to Yoshitaro Tanaka (the plaintiff) and Date (counter-claimant/4th-party plaintiff) collectively as "Plaintiffs" because they are aligned in interests. Similarly, the Court will sometimes refer to Kodani and FHB collectively as "Defendants." To avoid confusion with his father, the Court will refer to Plaintiff as "Yoshitaro" and his father as "Tanaka." Yoshitaro and Date have filed as co-plaintiffs a parallel action, Tanaka v. Tokyu Dentetsu Kabushiki Kaisya, et al., Civ. No. 97-1589DAE ("the TKK litigation"), which is currently pending before Chief Judge David Alan Ezra.

DISCUSSION

Kodani has filed two statute-of-limitations motions: One against Yoshitaro's RICO and professional malpractice claims, and one against Date's 4th-party claims. FHB has substantively joined Kodani's motion as to Yoshitaro's RICO claims.

I. The first Motion — Yoshitaro's RICO claims

The Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968, among other things, provides a civil cause of action for "any person injured in his business or property by reason of a violation" of RICO's criminal provisions. See 18 U.S.C. § 1964(c). RICO also provides a conspiracy cause of action. See 18 U.S.C. § 1962(d) ("It shall be unlawful for any person to conspire to violate any of the provision of subsection (a), (b), or (c) of [§ 1962]"). Overt acts for such conspiracy claims must be "act[s] of racketeering or otherwise wrongful under RICO." Beck v. Prupis, ___ U.S. ___, ___, 120 S.Ct. 1608, 1616, 146 L.Ed.2d 561 (2000). Despite their complexity, the possibility of treble damages and attorneys fees under section 1964(c) sometimes makes pursuing RICO claims worth the difficulty.

A civil RICO claim requires (1) conduct (2) of an "enterprise" (3) through a "pattern" (4) of racketeering activity (or "predicate acts") (5) causing injury to the plaintiffs "business or property." See, e.g., Grimmett v. Brown, 75 F.3d 506, 510 (9th Cir.1996) (citations omitted). A "pattern" for RICO purposes requires "at least two acts of racketeering activity ... the last of which occurred within ten years ... after a prior act of racketeering activity." 18 U.S.C. § 1961(5). RICO's "predicate acts" or "racketeering activity" include violations of certain federal statutes, many of which prohibit various types of fraud. See 18 U.S.C. § 1962.

In the absence of a statutory limitations period, the Supreme Court has determined by case law that a four-year limitations period applies to civil RICO actions. See Agency Holding Corp. v. Malley-Duff & Assocs., Inc., 483 U.S. 143, 156, 107 S.Ct. 2759, 97 L.Ed.2d 121 (1987). However, it has not as yet fully defined when such actions accrue. The instant motions raise accrual issues.

A. The law regarding accrual of RICO claims.

Before 1997, the circuits had followed at least three different general accrual rules. The Third Circuit followed a "last predicate act" rule, under which a claim would run from when the plaintiff "knew or should have known of the last injury or the last predicate act which is part of the same pattern of racketeering activity." Keystone Ins. Co. v. Houghton, 863 F.2d 1125, 1130 (3d Cir.1988). Under this rule, if a complaint was filed within four years of the last predicate act, a plaintiff could still recover for injuries caused by other predicate acts which occurred outside the limitations period.

Some circuits followed an "injury and pattern discovery" rule, under which the limitations period would not begin to run until a plaintiff discovered both (1) the injury and (2) that the injury was part of a pattern of RICO activity. See, e.g., Association of Commonwealth Claimants v. Moylan, 71 F.3d 1398, 1402 (8th Cir.1995).

Most circuits (including the Ninth), however, followed some form of an "injury discovery" rule. See, e.g., Grimmett, 75 F.3d at 511. Under this rule, the limitations period begins to run upon discovery of only the injury. "[A] civil RICO cause of action arises when the plaintiff knows or should know that she has been injured." Id. at 512. That is, even if a plaintiff did not know the injury was caused by a pattern of RICO activity, a claim would still accrue and the statute of limitations would still run.

Another rule — what appears to be a subset of the "injury discovery" rule — is a "separate accrual" rule, under which the commission of "new and separate" predicate acts within the four-year period permit a plaintiff to recover the additional damages caused by those acts. See Klehr v. A.O. Smith Corp., 521 U.S. 179, 190, 117 S.Ct. 1984, 138 L.Ed.2d 373 (1997) (discussing but not specifically adopting a separate accrual rule). Although the Supreme Court has not explicitly adopted a separate accrual rule, several circuits including the Ninth have. See Grimmett, 75 F.3d at 512-14 (allowing recovery if "new and independent" acts inflict "new" injury). The separate accrual rule generally applies in the context of a multiple-injury case. See, e.g., Bingham v. Zolt, 66 F.3d 553 (2d Cir.1995) (applying separate accrual rule in RICO matter against an attorney and accountant found liable for funneling money out of a deceased person's estate, if "separate and independent" injuries continue to flow from underlying RICO violations). That is, "new and independent" acts causing "separate and independent" injuries accrue anew. Even under this separate accrual rule, however, the Supreme Court has explained that "the plaintiff cannot use an independent, new predicate act as a bootstrap to recover for injuries caused by other earlier predicate acts that took place outside the limitations period." Klehr, 521 U.S. at 190, 117 S.Ct. 1984 (citations omitted).

In 1997, the Supreme Court in Klehr cut the possible accrual rules by one. It rejected the Third Circuit's "last predicate act" approach; accrual is not delayed until after the last predicate act of a pattern of RICO activity. See id. at 187-92, 117 S.Ct. 1984. The Court explained that "[b]ecause a series of predicate acts (including acts occurring at up to 10-year intervals) can continue indefinitely, such an interpretation, in principle, lengthens the limitations period dramatically." Id. at 187, 117 S.Ct. 1984. The Court discredited the idea that, as long as a defendant committed one predicate act within the four-year limitations period preceding suit, a plaintiff could recover not only for added harm caused by the latest predicate act but also for all harm caused by the entire pattern of RICO activity. See id. at 186-87 & 190, 117 S.Ct. 1984. The Court, however, did not decide upon a final rule. It specifically left open whether RICO claims accrue (1) when an injury and pattern is discovered, (2) when only the injury is discovered, or (3) some other time such as when the injury occurs (even absent discovery), which is the case under the Clayton Act. See id. at 198, 117 S.Ct. 1984 (Scalia, J., concurring).

This term, after the oral argument was held on the instant motions, the Supreme Court cut the possible accrual rules by one more. See Rotella v. Wood, ___ U.S. ___, 120 S.Ct. 1075, 145 L.Ed.2d 1047 (2000). The Court again did not specifically articulate a definitive rule. Rather, the Court eliminated the "injury and pattern discovery" accrual rule, recognizing that such a rule "would extend the potential limitations period for most civil RICO cases well beyond the time when a plaintiffs cause of action is complete." Id. at 1082. The Court left undecided whether the ultimate rule would be an "injury discovery" rule or a pure "injury occurrence" rule because such a decision was not necessary to resolve the case. See id. at 1080 n. 2. Nor did the Court need to decide whether a "separate accrual" rule would be inconsistent with RICO's purposes in multiple-injury cases. See id. at 1082 n....