Glessner v. Kenny

952 F.2d 702, 1991 WL 273916
CourtCourt of Appeals for the Third Circuit
DecidedDecember 23, 1991
DocketNo. 90-5885
StatusPublished
Cited by77 cases

This text of 952 F.2d 702 (Glessner v. Kenny) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Glessner v. Kenny, 952 F.2d 702, 1991 WL 273916 (3d Cir. 1991).

Opinion

[705]*705OPINION OF THE COURT

SLOVITER, Chief Judge.

We are once again required to analyze the applicability of RICO to a claim that ordinarily would have been framed in terms of a common law action for misrepresentation or fraud. The district court dismissed the complaint as to some plaintiffs as barred by the statute of limitations and as to the remaining plaintiffs for failure to state valid RICO claims, and plaintiffs appeal.

I.

Facts and Procedural History

Plaintiffs John Glessner, Tito Delgozzo, Claudia Capritti, Robert Slimm, Charles Heck and Wendy Heck purchased allegedly defective residential oil furnaces manufactured and sold by defendant Blueray Systems, Inc., a wholly owned subsidiary of defendant Meenan Oil Co., Inc. In 1983, Meenan was purchased by defendant KOV Corporation. Defendants William Kenny, Stanley Orczyk and Paul Vermylen were officers of Meenan and are now principals of KOV.

Blueray sold a line of “blue flame” oil furnaces and boilers throughout the United States and Canada for use primarily as residential home heating systems. Plaintiffs made their purchases between 1975 and 1984. According to plaintiffs’ complaint, the “blue flame” units were advertised as “state of the art residential heating system[s]” that were highly efficient and would result in considerable savings in home oil heating costs. Plaintiffs allege that because of an inherent defect, the “blue flame” units were inefficient and unsafe, and required unprecedented service to prevent carbon monoxide poisoning.

Plaintiffs filed suit on June 2,1988 in the District Court for the District of New Jersey on behalf of themselves and others who had purchased the “blue flame” units alleging various state law claims and the violation of the Racketeer Influenced and Corrupt Organizations Act (RICO) 18 U.S.C. §§ 1961-68 (1988). They claim that they were injured by defendants’ misrepresentations regarding the efficiency and safety of the furnaces.

Any person injured in his or her business or property by a RICO violation may bring a civil suit to recover treble damages. 18 U.S.C. § 1964(c) (1988). Plaintiffs’ complaint alleges three RICO violations: 1) that defendants used or invested money derived from racketeering activity to acquire an interest in an enterprise engaged in interstate commerce in violation of 18 U.S.C. § 1962(a) 1; 2) that defendants conducted the affairs of an enterprise through a pattern of racketeering activity in violation of section 1962(c)2; and 3) that defendants conspired to violate sections 1962(a) and 1962(c), in violation of section 1962(d). The complaint alleges that defendants used the mails to transmit advertisements, warranties and other written materials containing misrepresentations and omissions about the “blue flame” units in violation of the Mail Fraud Act, 18 U.S.C. § 1341 (1988).

Defendants moved for dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure, arguing that plaintiffs’ complaint failed to state valid RICO claims and was barred by the statute of limitations. Relying on deposition testimony, the district court dismissed the RICO claims of plaintiff Glessner and plaintiffs Wendy and Charles Heck as time barred. The RICO claims of the other plaintiffs were dismissed on the grounds that: 1) plaintiffs had not alleged an injury arising from the [706]*706investment of racketeering proceeds as required by 18 U.S.C. § 1962(a); 2) plaintiffs had not alleged an “enterprise” separate from the “persons” involved as required by 18 U.S.C. § 1962(c); and 3) the allegations of conspiracy were insufficient because there can be no conspiracy between a corporate entity and its employees, and, in the alternative, the complaint failed to plead the conspiracy claim adequately. The district court then dismissed the state law claims without prejudice.

Plaintiffs filed a timely appeal. We have jurisdiction under 28 U.S.C. § 1291.

II.

Statute of Limitations

We consider first the contention of plaintiffs Glessner and Charles and Wendy Heck that the district court erred as a matter of law in determining that their RICO claims were time barred.

The appropriate statute of limitations for civil RICO actions is four years. See Agency Holding Corp. v. Malley-Duff & Assocs., 483 U.S. 143, 156, 107 S.Ct. 2759, 2767, 97 L.Ed.2d 121 (1987). Because the complaint was filed on June 2,1988, the district court determined that any claims accruing prior to June 2, 1984 would be barred. The court found that these plaintiffs were aware of all of the elements of their RICO claims prior to that date, and therefore dismissed the complaint of these plaintiffs as time barred.

This court enunciated the standard for assessing accrual of a civil RICO cause of action in Keystone Insurance Co. v. Houghton, 863 F.2d 1125 (3d Cir.1988). We noted the difficulty in applying the usual rules for accrual of actions to private civil RICO claims because of RICO’s requirement that plaintiff show injury to its business or property as a result of a pattern of racketeering activity. We stated that the “last injury discovery rule,” under which a claim arises when a plaintiff knows or should have known of his or her injury, cannot be applied to a RICO plaintiff whose knowledge of injury arises solely from a single predicate act because the plaintiff may have discovered the injury but not the pattern. Id. at 1129. Instead, a plaintiff’s limitations period must be measured from the time it knew or should have known of the pattern of racketeering activity.3

We articulated the rule for accrual of a civil RICO action as follows:

[T]he limitations period for a civil RICO claim runs from the date the plaintiff knew or should have known that the elements of the civil RICO cause of action existed unless, as a part of the same pattern of racketeering activity, there is further injury to the plaintiff or further predicate acts occur, in which case the accrual period shall run from the time 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.

Id. at 1130.

Applying the Keystone rule to this case, the district court found that plaintiffs Glessner and Charles and Wendy Heck knew or should have known of the RICO elements of their claim prior to June 2, 1984.

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952 F.2d 702, 1991 WL 273916, Counsel Stack Legal Research, https://law.counselstack.com/opinion/glessner-v-kenny-ca3-1991.