108 F.3d 529
RICO Bus.Disp.Guide 9259
Guy R. DETRICK; Donna Detrick; Fast Forward, Incorporated,
Plaintiffs-Appellants,
and
Northeast Container Corporation, Plaintiff,
v.
PANALPINA, INCORPORATED; Panalpina Air Freight,
Incorporated; Multi-Modal Freight Systems,
Incorporated; Multi-Modal Freight
Systems Of Virginia; Sylvan
Friedman, Defendants-Appellees,
and
American Motor Lines, Incorporated; Baltimore Freightways,
Incorporated; Blue Star Freight Lines, Incorporated;
General Motor Lines, Incorporated; Hagerstown Motor
Express, Incorporated; Jennifer Motor Express,
Incorporated; Maryland Transport And Storage Company;
Mills Trucking, Incorporated; National Motor Lines,
Incorporated; New Windsor Express, Incorporated; South
Carolina Motor Express, Incorporated; Tidewater Trucking
Company, Incorporated; U.S. Motor Express, Incorporated;
U.S. Transport Group; Vista Motor Express, Incorporated;
John Does, 1-10, Defendants.
Guy R. DETRICK; Donna Detrick; Fast Forward, Incorporated,
Plaintiffs-Appellees,
and
Northeast Container Corporation, Plaintiff,
v.
PANALPINA, INCORPORATED; Panalpina Air Freight,
Incorporated, Defendants-Appellants,
and
Multi-Modal Freight Systems, Incorporated; Multi-Modal
Freight Systems of Virginia; Sylvan Friedman; American
Motor Lines, Incorporated; Baltimore Freightways,
Incorporated; Blue Star Freight Lines, Incorporated;
General Motor Lines, Incorporated; Hagerstown Motor
Express, Incorporated; Jennifer Motor Express,
Incorporated; Maryland Transport and Storage Company;
Mills Trucking, Incorporated; National Motor Lines,
Incorporated; New Windsor Express, Incorporated; South
Carolina Motor Express, Incorporated; Tidewater Trucking
Company, Incorporated; U.S. Motor Express, Incorporated;
U.S. Transport Group; Vista Motor Express, Incorporated;
John Does, 1-10, Defendants.
Nos. 95-2937, 95-3074.
United States Court of Appeals,
Fourth Circuit.
Argued Oct. 31, 1996.
Decided March 18, 1997.
ARGUED: Robert Paul Stein, Camhy, Karlinsky & Stein, L.L.P., New York City, for Appellants. David K. Monroe, Galland, Kharasch, Morse & Garfinkle, P.C., Washington, DC, for Appellees. ON BRIEF: Martin E. Karlinsky, Allison J. Unger, Camhy, Karlinsky & Stein, L.L.P., New York City; Frank C. Razzano, Lisa E. Perry, Camhy, Karlinsky, Stein, Razzano & Rubin, L.L.P., Washington, DC, for Appellants. Andrew T. Goodson, Galland, Kharasch, Morse & Garfinkle, P.C., Washington, DC, for Appellees Panalpina; Max H. Lauten, Kramon & Graham, P.A., Baltimore, MD, for Appellees Multi-Modal and Friedman.
Before MURNAGHAN and NIEMEYER, Circuit Judges, and HARVEY, Senior United States District Judge for the District of Maryland, sitting by designation.
Affirmed by published opinion. Judge MURNAGHAN wrote the opinion, in which Judge NIEMEYER and Senior Judge HARVEY joined.
OPINION
MURNAGHAN, Circuit Judge:
In April, 1990, Guy R. Detrick, Donna Detrick, and Fast Forward, Inc., abandoned their contract with Panalpina, Inc., and Panalpina Air Freight, Inc. (collectively, Panalpina), under which the Detricks provided warehouse services at Panalpina's Sterling, Virginia facility. The Detricks maintain that Panalpina, Multi-Modal, and Friedman conspired to force them to abandon the contract.
In their first amended complaint, the Detricks alleged various violations of the Racketeering Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq., and the Virginia conspiracy statute, Va.Code Ann. § 18.2-500 (Michie 1995). Subsequently, Panalpina counterclaimed against Guy and Donna Detrick alleging that the Detricks provided false invoices in breach of their contractual obligations to Panalpina, and that the Detricks willfully and maliciously conspired to injure Panalpina in its business, in violation of Va.Code Ann. §§ 18.2-499-500 (Michie 1995).
After the close of discovery, the district court granted summary judgment in favor of Panalpina, Multi-Modal, and Friedman on the grounds that the Detricks' RICO and Virginia state law claims were time-barred. On Panalpina's cross-claim, the district court also granted summary judgment in favor of the Detricks on the grounds that Panalpina had offered insufficient evidence that the Detricks breached their contractual obligations, and that Panalpina's conspiracy claim was barred by the intracorporate conspiracy doctrine. The Detricks and Panalpina now appeal. After careful consideration, we affirm in all aspects the decision of the district court.
I.
FACTS AND PROCEDURAL HISTORY
Guy R. Detrick and Donna Detrick are the sole stockholders of Fast Forward, Inc. (Fast Forward), and are majority stockholders of an affiliated corporation known as Northeast Container Corporation (Northeast). Panalpina, an international freight forwarder, arranges for the world-wide transportation of goods on behalf of its customers. Northeast and later Fast Forward, provided warehouse handling services for Panalpina in Herndon, Virginia and Sterling, Virginia, pursuant to informal understandings and later pursuant to written agreements dated October 24, 1988, and September 5, 1989. Pursuant to these agreements, the Detricks were Panalpina's primary warehouse service provider.
In November, 1988, Panalpina was awarded a substantial Foreign Military Sales Program (FMSP) contract for the transportation of arms, weapons, and military equipment in connection with orders placed by the government of Turkey (Turkey or Turkish/FMSP). In Spring, 1989, the Detricks began to process the Turkish/FMSP freight moving through the Sterling warehouse.
At this same time, the relationship between the Detricks and Panalpina began to deteriorate as Panalpina began to demand discounts in fees charged by Fast Forward. In addition, Panalpina sought increases of staff, and insisted on "charging back" the Detricks for expenses not related to the warehouse contract. Panalpina also refused to lease additional space in the warehouse complex needed to accommodate the Turkish/FMSP contract.
As a result of Panalpina's actions, the Detricks' costs increased and the warehouse contract became unprofitable. As such, in April, 1990, the Detricks abandoned the warehouse contract. Contemporaneously, Friedman and Multi-Modal stepped in and using the former Northeast employees and assets Friedman had purchased from the Detricks, began to provide warehouse services to Panalpina at the Sterling site.
In May, 1990, shortly after the Detricks abandoned the warehouse contract, Friedman hired Guy Detrick to work in a sales position at Multi-Modal at the Panalpina warehouse in Sterling; Multi-Modal also employed Donna Detrick on a hourly basis during the summer of 1990 to answer telephones and to perform light clerical work. On March 11, 1991, a former Fast Forward employee then employed by Multi-Modal approached Guy Detrick with an invoice containing an obvious billing discrepancy. Later that day, Detrick entered the copy room in the Panalpina warehouse, where he saw a stack of similar documents, including a freight bill "that looked like it had been done in a cheap print shop, that once again for the second time that day had the exact same information but a huge mark-up on the price." Upon further investigation, Detrick confirmed his suspicions that Friedman, Panalpina, and others were possibly engaged in an unlawful rebilling scheme, the object of which was to defraud the United States and foreign governments.
Following the discovery of the alleged fraud, in March, 1991, the Detricks consulted counsel in an effort to determine whether they had sustained an injury for which the Detricks could sue. The Detricks also met with agents of the Internal Revenue Service (IRS), the Office of the Inspector General of the United States Department of State (OIG), and agents of the Federal Bureau of Investigation (FBI) and Defense Investigatory Service (DIS).
On March 9, 1995, the Detricks filed the instant action in the district court alleging that the alleged rebilling scheme, operated by Panalpina, Multi-Modal, and Friedman violated RICO, 18 U.S.C. § 1961 et seq., and the Virginia conspiracy statutes, Va.Code. Ann. § 18.2-500 (Michie 1995). Panalpina filed a counterclaim alleging that the Detricks had (1) provided false invoices to Panalpina in breach of their contractual obligations to Panalpina; and (2) conspired willfully and maliciously to injure Panalpina in its business, in violation of Va.Code Ann. §§ 18.2-499 and 500. At the close of discovery, Panalpina, Multi-Modal, and Friedman moved for summary judgment on two grounds: (1) the RICO and Virginia conspiracy claims were barred by the statute of limitations, and (2) the Detricks lacked standing with respect to the RICO and Virginia conspiracy claims.
On October 26, 1995, the district court denied the motion on the standing ground, but granted summary judgment with respect to the statute of limitations ground. A day later, on October 27, 1995, the district court granted summary judgment in favor of the Detricks on Panalpina's cross-claim finding that Panalpina had failed to present sufficient evidence to sustain its state law claims, and further, that the intracorporate doctrine barred Panalpina's conspiracy claim pursuant to Va.Code Ann. §§ 18.2-499-500.
II.
The Detricks argue that the district court erred in dismissing their RICO and Virginia conspiracy claims. We now address the Detricks' contentions.
A.
Before turning to the merits of the instant appeal, the court must address Guy and Donna Detrick's, and Fast Forward's Motion to Substitute the Detricks' bankruptcy Trustees, H. Jason Gold and Gordon P. Peyton for Guy and Donna Detrick as Appellants. Panalpina has filed an opposition to the substitution motion arguing that the substitution will unnecessarily complicate the instant appeal. Friedman and Multi-Modal have no opposition to the substitution.
The Bankruptcy Code defines property of the debtor's estate to include "all legal or equitable interest of the debtor in property as of the commencement of the case." 11 U.S.C. § 541(a)(1). In In re Richman, 104 F.3d 654 (4th Cir.1997), the Fourth Circuit stated that "[a]s a general matter, in a Chapter 7 proceeding, the trustee alone has standing to raise issues before the bankruptcy court and to prosecute appeals. A trustee is the representative of the bankrupt's estate and has the capacity to sue or be sued." Id. at 657. Moreover, the court noted that "[o]nce appointed, the trustee becomes the estate's 'proper party in interest, and the only party with standing to appeal the bankruptcy court's order.' " Id. citing In re Eisen, 31 F.3d 1447, 1451 n. 2. (9th Cir.1994); see also Jones v. Harrell, 858 F.2d 667, 669 (11th Cir.1988) (trustee in bankruptcy succeeds to all causes of action held by the debtor and debtor lacks standing to pursue those causes of actions); 11 U.S.C. § 323(a) (trustee becomes the sole representative of the estate). In addition, the decision whether to pursue a claim or not is vested within the trustee's discretion. See In re Louden, 106 B.R. 109, 112 (Bankr.E.D.Ky.1989) ("It is the trustee and only the trustee who may, in the exercise of his sound judgment and discretion, attempt to reduce to judgment causes of action which are the property of the debtors' estate.") In exercising his/her judgment and discretion, the Trustee has three choices with respect to pending actions by the debtor: (1) intervene and assume prosecution as trustee, (2) consent to prosecution by the debtor for the benefit of the estate, or (3) decline prosecution. See 1 ROBERT E. GINSBURG & ROBERT D. MARTIN, GINSBURG & MARTIN ON BANKRUPTCY § 12.06[G] (4th ed.1996); Fed.R.Bankr.Pro. 6009; American Foods, Inc. v. Dezauche, 74 F.Supp. 681, 682 (W.D.N.Y.1947).
As Panalpina noted before the district court, since the Detricks have filed for bankruptcy protection, the Detricks, in their individual capacities, lack standing to pursue the instant lawsuit, as the Detricks' claims now belong to the bankruptcy Trustees. The district court denied Panalpina's motion for summary judgment on the standing issue reasoning that "I am not going to dismiss this claim or grant summary judgment on this claim because of standing in this posture when the Bankruptcy Court has reopened it and they have entered an order that this counsel [Detricks'] shall continue and all." The district court, however, did not substitute the bankruptcy Trustees as plaintiffs. In addition, Panalpina argues that the Trustees may not be substituted as Appellants in the instant case because the Trustees were not substituted as plaintiffs before the district court, and the district court's entry of summary judgment was directed against Guy and Donna Detrick, and Fast Forward, Inc.
While no doubt exists that the bankruptcy Trustees did not file a motion to substitute as plaintiffs before the district court, by virtue of the Detricks' bankruptcy, the Trustees succeeded to the Detricks' RICO and conspiracy claims, and the Trustees' retention of the Detricks' counsel sufficiently evinced the Trustees' exercise of their discretion to allow the Detricks to pursue the present cause of action on behalf of the estate. As such, the judgment entered against the Detricks by the district court was a judgment entered on behalf of the Detricks' estate, not on behalf of the Detricks in their individual capacity. Accordingly, the Trustees may pursue the appeal of the district court's decision. Hence, we conclude that the motion to substitute the Trustees as appellants in the instant action should be granted.
B.
Turning to the merits of the appeal, the court reviews the district court's grant of summary judgment de novo, regarding the evidence in the same plenary manner and applying the same standard the district court applied. Wagner v. Wheeler, 13 F.3d 86, 90 (4th Cir.1993). Under this standard, all facts and inferences to be drawn from those facts must be viewed "in a light most favorable" to the nonmoving party. Ross v. Communications Satellite Corp., 759 F.2d 355, 364 (4th Cir.1985). A mere scintilla of evidence in support of the nonmovant's position will not defeat a motion for summary judgment, rather the nonmoving party must demonstrate that there exists a genuine issue of material fact to preclude summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986).
1. RICO Claim
The RICO statute does not contain an express statute of limitations period for actions arising from either its civil or criminal enforcement provisions. In Agency Holding Corp. v. Malley-Duff & Assocs., Inc., 483 U.S. 143, 156-57, 107 S.Ct. 2759, 2767-68, 97 L.Ed.2d 121 (1987), however, the United States Supreme Court held that claims arising under civil RICO shall be governed by a four-year statute of limitations. Unfortunately for the courts of appeals and district courts throughout the country, the Supreme Court declined to decide when a claim under RICO accrues, "[b]ecause it is clear that [the Appellee's] RICO claims accrued within four years of the time the complaint was filed." Agency Holding, 483 U.S. at 156-57, 107 S.Ct. at 2767.
The Supreme Court's lack of guidance on the accrual issue has generated a split amongst the federal courts of appeals and district courts. The Fourth Circuit in Pocahontas Supreme Coal Co. v. Bethlehem Steel Corp., 828 F.2d 211 (4th Cir.1987), has adopted a theory of accrual known as the "injury discovery" rule. The injury discovery rule provides that a RICO claim accrues and the statute of limitations begins to run "when a plaintiff knows or should know of the injury that underlies his cause of action." Id. at 220; see also Bausch v. Philatelic Leasing, Ltd., 728 F.Supp. 1201, 1206 (D.Md.1989), aff'd, 34 F.3d 1066 (4th Cir.1994) (Table).
At the core of the instant controversy is the circuit's decision in Pocahontas. While purportedly not challenging the propriety of the "injury discovery" rule, the Trustees contend that the district court failed properly to apply the rule to the facts of the instant case. Specifically, the Trustees maintain that at the time of their abandonment of the warehouse contract in 1990, when the Detricks sustained an economic loss, the Detricks had no reason to know, and could not have possibly known that they had incurred any "injury that underlies their cause of action" within the meaning of civil RICO, 18 U.S.C. § 1964(c). The Trustees argue that the mere occurrence of economic loss does not trigger the statute of limitations, under the injury discovery rule adopted by the circuit in Pocahontas . Rather, the Trustees maintain that the plaintiff must have had knowledge, either actual or constructive, that such "injury" is related to or arises from at least one predicate act giving rise to a RICO violation.
In Pocahontas, the plaintiff, a contract coal mining company and its sole stockholder, asserted antitrust and conspiracy claims under § 8 of the Clayton Act, 15 U.S.C. § 19, §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, § 1964 of RICO, 18 U.S.C. § 1964, and under state law. Each of these claims was based, inter alia, on allegedly illegal interlocking directorates between and among the defendants. The plaintiff alleged that the termination of its contract mining agreement on May 1, 1979 by the defendants, was part of a general conspiracy among the defendants to eliminate certain contract miners in order to monopolize the relevant coal market. When the plaintiff's contract was terminated on May 1, 1979, the plaintiff had no knowledge whatsoever of the corporate relationships and interlocking directorates upon which its RICO claim was based. Nor was the plaintiff aware that the termination of its contract was related to the defendants' conspiracy to violate the antitrust laws. The plaintiff was only aware that its contract had been terminated, and in turn, the plaintiff had suffered an economic loss therefrom. Pocahontas, 828 F.2d at 214.
Subsequently, from time to time, plaintiff inquired of the defendants about the low prices the defendants were paying for coal, to which the defendants responded that the low prices were a result of poor market conditions. Only after searching through public records, in early 1984, did the plaintiff learn of the interrelationships between the various defendants. In December, 1984, plaintiff filed suit. Id. at 215.
In affirming the dismissal of plaintiff's claim, the Pocahontas court held that plaintiff's RICO claim arose when plaintiff knew or should have known of the injury underlying its RICO cause of action. Id. at 220. The court also rejected as to both the RICO and antitrust claims, plaintiff's claim of fraudulent concealment. Thus, the court held that plaintiff's RICO claims were barred by the four-year statute of limitations.
The Trustees urge that the "injury discovery" rule adopted by the circuit in Pocahontas is a "knowledge-based rule" as "[i]t is not mere economic loss which marks the accrual of a RICO cause of action, but [the Detricks'] knowledge of facts and circumstances sufficient to put the plaintiff on inquiry notice and demonstrate some reasonable correlation between the loss and the RICO cause of action--only this connection signifies 'injury that underlies the cause of action.' " Trustees' Brief, at 18.
For support for their position, the Trustees tellingly rely on cases from other circuits. The Trustees argue that the application of the injury discovery rule by the Ninth Circuit in Beneficial Standard Life Ins. Co. v. Madariaga, 851 F.2d 271 (9th Cir.1988), is fully consistent with the "knowledge based rule." In deciding whether to apply the accrual rule as announced in Compton v. Ide, 732 F.2d 1429, 1433 (9th Cir.1984), or the accrual rule used in antitrust cases, the Ninth Circuit chose to apply the knowledge-based Compton rule to the plaintiff's claims. Under the Compton "knowledge-based rule", plaintiff's suit would be barred if the plaintiff "knew or should have known about its claims within the four-year RICO statute of limitations period." Beneficial, 851 F.2d at 275 (emphasis added). Further, the court stated that "the statute of limitations period accrued when [the plaintiff] had actual or constructive knowledge of the fraud..." Id. (emphasis added).
In our view, the Ninth Circuit's application of the injury discovery rule requires the plaintiff's knowledge, either actual or constructive, of the underlying fraud, in addition to the injury for which the plaintiff is seeking compensation. Throughout the Ninth Circuit's discussion of the accrual time of RICO claims, the court refers to the plaintiff's knowledge of its claims, or the underlying fraud. Since, the court was aware that under the antitrust accrual rule, the statute of limitations is triggered by the date of the injury alone, the Ninth Circuit's injury discovery rule is more akin to the circuits that require that the plaintiff know both of his injury and the pattern of racketeering which serve as a basis for his RICO action.
The Trustees also rely upon an unpublished district court decision from New York, Dayton Monetary Assocs. v. Donaldson, Lufkin & Jenrette Securities Corp., [1992 Transfer Binder] Fed.Sec.L.Rep. (CCH) p 97,026, 1992 WL 204374 (S.D.N.Y. Aug. 11, 1992). In that case, plaintiffs asserted RICO claims arising out of their investments in limited partnerships in which plaintiffs' tax losses were disallowed because of fraudulent misconduct on the part of various agents of the partnerships. In moving to dismiss plaintiffs' claims on the basis of the statute of limitations, the defendants argued that because of prior dissemination of adverse public disclosure regarding problems with investments, plaintiffs knew or should have known of the alleged fraud before March 25, 1987. In contrast, the plaintiffs urged that their RICO claims did not accrue until October 27, 1987, when some of the plaintiffs learned of the existence of secret agreements between and among the defendants relating to the alleged fraud, or until December, 1987, when certain of the individual defendants were convicted of tax fraud.
Applying the "injury discovery" rule the district court held that plaintiffs' RICO claims accrued as a matter of law on "March 25, 1987, when [the defendant's] indictment became public," which was the earliest date on which the plaintiffs knew or should have known of "the fraudulent scheme which is the basis for the claims here." Id. at 94,523. The court emphasized that at the time the plaintiffs had suffered their investment losses, they had no knowledge of defendants' fraudulent scheme. The district court stated:
Here, although plaintiffs knew by 1985 that they had suffered losses in their investments in Groups, they cannot be charged as a matter of law with knowledge then that the losses were actually 'racketeering injuries' (caused by defendants' racketeering acts) within the meaning of Bankers Trust.
Id. at 94,522. The Dayton court stated "plaintiffs first learned of defendants' racketeering acts and later discovered that they were injured by those acts ... immediately after plaintiffs learned of their RICO injury, they had all the information necessary to bring RICO actions, because they already knew of defendants' racketeering acts." Id. at 94,522.
Thus, following the Beneficial and Dayton courts' application of the knowledge-based injury discovery rule, the Trustees argue that the district court should be reversed because until March 11, 1991, when the former Fast Forward employee showed Guy Detrick the false shipping invoice, the Detricks had no knowledge whatsoever of the alleged fraudulent activities which formed the basis for the Trustees' RICO claims. Trustees' Brief, at 22.
The Trustees' argument is problematic for a number of reasons, not the least of which is the Trustees' reliance on non-binding authority. Despite the fact that the Trustees maintain that they are not challenging the propriety of the injury discovery rule, the Trustees are doing precisely just that. Seemingly, the Ninth Circuit has read the term injury to require that the plaintiff know or have constructive knowledge of the racketeering activity which forms the basis for the RICO claim. The Dayton court also applied the injury discovery rule in a like manner. In that case, the district court held, apparently in contravention of Bankers Trust, that the plaintiff must have knowledge of the injury, as well as, the defendants' racketeering acts, before the RICO cause of action begins to accrue, and the statute of limitations begins running. Both the Beneficial and Dayton courts speak in terms of the plaintiff's claim, not injury, and as such have interpreted the term "injury" for RICO purposes to encompass the actual injury and the cause of action.
In Pocahontas, the circuit stated that "the statutory period begins to run when a plaintiff knows or should know of the injury that underlies his cause of action." Pocahontas, 828 F.2d at 220. Tellingly, the court's holding recognizes the distinction between the injury and the cause of action. The Pocahontas plaintiff urged that it did not discover until early 1984, the interrelationships amongst the defendants that formed the bases for the RICO claims. Nevertheless, the court concluded that the plaintiff's "injury" occurred in May 1979, when plaintiff's contract was terminated, and since the suit was filed in December 1984, the suit was time-barred.
Nothing in the Pocahontas case suggests that the circuit intended the "injury" to refer to both the actual injury as well as the plaintiff's discovery of the defendant's racketeering acts. The Trustees' attempt to distinguish Pocahontas on the grounds that the information in Pocahontas was publicly available, and thus, the plaintiffs knew or should have known that they had suffered an injury arising out of and connected to misconduct, Trustees' Brief, at 18 n. 11, is equally unavailing. Other than during the recitation of the facts, and in the court's discussion of the fraudulent concealment claim, the court did not mention that the public nature of the information played any role in determining when the statute of limitations began to run.
Furthermore, the adoption of the Trustees' proposed rule would be directly contrary to Pocahontas. The Detricks' injury occurred in April, 1990, when the Detricks abandoned their warehouse contract with Panalpina. The Detricks discovered the alleged fraud on March 11, 1991. Thereafter, the Detricks filed the instant suit on March 9, 1995. A straightforward application of the rule adopted in Pocahontas provides that the four-year statute of limitations began to run in April 1990, the date of the injury. Hence, the district court correctly concluded that the Trustees' claims, filed in 1995, were time-barred.
2. Fraudulent Concealment
As a fallback argument, the Trustees argue that even if the injury occurred in April, 1990, and hence, the statute of limitations would bar any claims after April, 1994, the statute of limitations should be tolled until March 11, 1991, the date of Guy Detrick's discovery, based upon the equitable doctrine of fraudulent concealment.
The purpose of the fraudulent concealment doctrine is "to prevent a defendant from 'concealing a fraud, or ... committing a fraud in a manner that it concealed itself until' the defendant 'could plead the statute of limitations to protect it.' " Supermarket of Marlinton v. Meadow Gold Dairies, 71 F.3d 119, 122 (4th Cir.1995) (Marlinton). Furthermore, "when the fraud has been concealed or is of such a character as to conceal itself, and the plaintiff is not negligent or guilty of laches, the limitations period does not begin to run until the plaintiff discovers the fraud." Id. at 122. A party seeking to invoke the doctrine of fraudulent concealment must demonstrate that "(1) the party pleading the statute of limitations fraudulently concealed facts that are the basis of plaintiff's claim, and (2) the plaintiff failed to discover those facts within the statutory period, despite (3) the exercise of due diligence." Id.
Initially, we must address by what standard do the Trustees have to demonstrate the existence of the first prong. In Marlinton, a price-fixing case, the Fourth Circuit addressed the differing standards for determining whether antitrust plaintiffs have satisfied the first element of the fraudulent concealment doctrine. After weighing the pros and cons of the "self concealing" standard, the "separate and apart" standard, and the intermediate "affirmative acts" standard, the court ultimately held that the intermediate affirmative acts standard should be applied because "price-fixing is not inevitably deceptive or concealing", Marlinton, 71 F.3d at 123, and the intermediate affirmative acts standard "would permit the courts to avoid the difficult, if not impossible, task of deciding which acts are in furtherance of conspiracies and which acts are separate and apart from conspiracies." Id. at 125.
Thus, the court held that to satisfy the first element of the fraudulent concealment doctrine, the plaintiff must "provide evidence of affirmative acts of concealment by [the defendant]. Those acts, however, need not be separate and apart from the acts of concealment involved in the antitrust violation; rather, [the plaintiff's] proof may include acts of concealment involved in the alleged antitrust violations itself." Id. at 126.
The issue the Trustees raise is not novel, in fact, the Pocahontas court addressed the precise issue. In that case, the plaintiffs sought to avoid the bar of the statute of limitations, on their antitrust and RICO claims, by similarly drawing on the doctrine of fraudulent concealment. Plaintiffs claimed that (1) the existence of the interrelationships among the defendant companies, and (2) the defendants' specific activities undertaken pursuant to the conspiracy, such as boycotts, suspensions, systematic terminations of contract miners, delivery quotas, and related manipulative and deceptive practices, were concealed from the plaintiffs, and hence, the statute of limitations should be tolled by the fraudulent concealment doctrine. The district court disagreed.
In affirming the district court, the Fourth Circuit noted that the district court "[p]roperly [took] into account the indisputable fact that any structural interrelationship between the corporate defendants was necessarily discoverable upon simple inquiry and consultation of public records...." Pocahontas, 828 F.2d at 218. Furthermore, the court rejected, as the district court had, the plaintiffs' averments that the defendants employed techniques of secrecy to avoid detection of the combination and conspiracy. The court noted that the plaintiffs' general inquiry as to why the defendants were able to accept deliveries of coal at such a low price, and the defendants' false answer that market conditions dictated the low price, was insufficient to establish the fraudulent concealment. The court stated that
[t]o permit a claim of fraudulent concealment to rest on no more than an alleged failure to own up to illegal conduct upon this sort of timid inquiry would effectively nullify the statute of limitations in these cases. It can hardly be imagined that illegal activities would ever be so gratuitously revealed.
Id. at 218-19.
As the Marlinton court noted, the Pocahontas court did not employ any of the standards outlined in Marlinton, which of course, is not surprising given that neither party argued for the adoption of any standard, and the case law had not been developed on that issue in the Fourth Circuit. Marlinton, 71 F.3d at 124. Hence, while the instant case does not involve antitrust violations the intermediate affirmative acts standard adopted in Marlinton would apply in the instant case. As in the price-fixing case involved in Marlinton, the alleged unlawful rebilling scheme does not require secrecy as an element of their RICO claims. Thus, for the Trustees to prevail, they must come forward with evidence, that as part of the alleged rebilling scheme, Panalpina, Multi-Modal, and Friedman committed affirmative acts which concealed their conduct from the Detricks.
Here, the Trustees argue that the defendants' activities of (a) the creation of dummy corporations which had no employees and conducted no business, (b) the use of false addresses to obtain carrier authorizations from the Interstate Commerce Commission, (c) the fraudulent re-billing through false freight bills for non-existent freight brokerage activity, (d) the fraudulent inflation of invoices in connection with truck brokerage activity, (e) the payment of substantial bribes to officers and employees of Panalpina, and (f) the deposit of checks received from those criminal activities in numerous bank accounts which were opened in order to insulate these criminal activities from discovery all demonstrate Panalpina, Multi-Modal, and Friedman's fraudulent concealment of its rebilling scheme from the Detricks.
Moreover, the Trustees argue that the instant case involved no public filings, no press releases, or any other public information from which the Detricks could have discovered the alleged illegal activities of Panalpina, Multi-Modal, and Friedman. Thus, the Trustees maintain that no information, whatsoever, was available to them to place them on inquiry notice or require them to proceed with a reasonable and diligent investigation into the alleged fraudulent conduct, until at the earliest March 11, 1991.
The district court concluded that the Trustees' evidence was lacking. The district court noted that Multi-Modal hired the Trustees and provided them with access to the warehouse, and ostensibly, to the fraudulent invoices. The district court rejected the Trustees' fraudulent concealment claim concluding that the Trustees "presented no evidence of any acts of fraudulent concealment, but rather present[ed] evidence that Panalpina hired and put the [Detricks] in the very warehouse where they would have access to the records they claim were needed to discover the fraud." Order, at 2.
In order for the Trustees to succeed on a fraudulent concealment claim, they must demonstrate that Panalpina, Multi-Modal, and Friedman engaged in some affirmative acts from April, 1990 to March 11, 1991, to conceal the alleged fraud. The district court concluded that the Trustees failed to demonstrate any such affirmative acts. We agree.
3. Virginia Conspiracy Claim
The Trustees also sought relief under the Virginia conspiracy statute, Va.Code Ann. § 18.2-500 (Michie 1995) for their injuries. The Trustees claim the district court erred in concluding that their claims were barred by the statute of limitations.
The statute of limitations applicable to the conspiracy claim is five years. Va.Code Ann. § 8.01-243 (Michie 1995). A cause of action under the conspiracy statute accrues at the time the Detricks first suffered any damages resulting from the acts committed in furtherance of the conspiracy. Eshbaugh v. Amoco Oil Co., 234 Va. 74, 360 S.E.2d 350 (1987). As the Virginia Supreme Court stated in Stone v. Ethan Allen, Inc., 232 Va. 365, 350 S.E.2d 629 (1986)
where an injury, though slight, is sustained in consequence of the wrongful or negligent act of another and the law affords a remedy therefor, the statute of limitations attaches at once. It is not material that all the damages resulting from the act should have been sustained at the time and the running of the statute is not postponed by the fact that the actual or substantial damages do not occur until a later date.
Id. 350 S.E.2d at 632; see also International Surplus Lines Ins. Co. v. Marsh & McLennan, Inc., 838 F.2d 124, 129 (4th Cir.1988) ("In Virginia, only the slightest injury is required to start the running of the limitations period ... It is of no consequence that the amount of damages [is] not ascertainable until a later date.")
Again, the dispute between the parties centers on when the statute of limitations began to run. The Trustees maintain that the conspiracy claim accrued, at the earliest, in April 1990, when the Detricks abandoned the warehouse contract. Panalpina, Multi-Modal, and Friedman argue, and the district court found, that the Detricks were injured by Panalpina's "insistence that they lower rates and increase staffing levels ... in early 1989 at the latest." Order, at 3.
The gravamen of the Trustees' argument is that since the object of the alleged conspiracy was to force the Detricks to abandon their warehouse contract, and because termination of that contract is the injury for which the Trustees seek compensation, the statute of limitations did not commence until April 1990, when the Detricks abandoned their contract. Moreover, the district court also properly concluded that the Trustees' argument flies in the face of well-established Virginia law as to when the statute of limitations begins to run. The Trustees do not challenge that in late 1988, and in early 1989, Panalpina demanded that the Detricks lower their rates and increase staffing at the warehouse. Hence, the Detricks' initial injury, albeit slight, occurred in early 1989 at the latest, and culminated in April 1990. Virginia law is clear that the statute of limitations begins to run, when any injury occurs, and thus, the district court properly concluded that the statute of limitations began to run in 1989, and consequently, the Trustees' lawsuit filed in March, 1995 was time barred by the five-year statute of limitations.III.
On its cross-appeal, Panalpina argues that the district court erred in dismissing Panalpina's breach of contract and Virginia conspiracy statute counterclaims. Finding no error, we affirm. We now address each of Panalpina's counterclaims.
A. BREACH OF CONTRACT CLAIM
To establish a cause of action for breach of contract, Panalpina must demonstrate that (1) the Detricks had a legal obligation to Panalpina; (2) the Detricks violated that right or duty; and (3) Panalpina was injured as a result of the breach. Westminster Investing Corp. v. Lamps Unlimited, Inc., 237 Va. 543, 379 S.E.2d 316, 318 (1989).
Panalpina argues that the invoices submitted by Panalpina provide ample support for Panalpina's breach of contract claim. Panalpina contends that the invoices provide substantial evidence that the Detricks sought double or triple reimbursement for invoices Panalpina had already paid. In contrast, the Detricks argue that none of the materials submitted by Panalpina satisfied the admissibility requirements of Fed.R.Civ.P. 56(e) because each of Panalpina's employees and officers refused to testify about the invoices, instead each officer and employee invoked their Fifth Amendment privileges. Thus, the Detricks argue that these documents unaccompanied by any testimony or other admissible evidence necessary to demonstrate their authenticity or an exception to the hearsay rule should be rejected. Moreover, the Detricks submitted the affidavit of Donna Detrick flatly denying that the Detricks had overbilled Panalpina for any charges.
The district court, in our view, properly concluded that Panalpina had presented no evidence from which a reasonable jury could find a breach of contract. District Court Order, October 27, 1995, at 1. Panalpina's invoices, standing alone, fail to demonstrate that any overbilling has occurred, and hence, the district court's decision is affirmed.
B. CONSPIRACY CLAIM
In addition, the district court concluded that Panalpina's conspiracy claim was barred by the intra-corporate immunity doctrine. The intracorporate immunity doctrine provides that a conspiracy can not exist between the agents of a corporation and the corporation itself. Griffith v. Electrolux Corp., 454 F.Supp. 29, 32 (E.D.Va.1978). A well-established exception, however, exists to the doctrine, namely, when the parties have "an independent personal stake" in the conspiracy. Greenville Publ'g Co. v. Daily Reflector, Inc., 496 F.2d 391, 399 (4th Cir.1974).
Panalpina argues that the exception to the doctrine applies in the instant case because the Detricks signed the warehouse contract in their individual capacity. Moreover, Panalpina contends that the Detricks have sued in their individual capacities, and not on behalf of Fast Forward. Thus, Panalpina argues that the Detricks "had an 'independent personal stake' in the conspiracy which is separate and apart from Fast Forward's interest." Appellees' Brief, at 36.
The district court concluded that Panalpina had merely alleged a "conspiracy among the corporation and officers of that corporation and a corporation cannot conspire with itself." Order, at 2. We concur.
For the foregoing reasons, the judgment of the district court is
AFFIRMED.