Broccoli v. Ashworth

Background

Domenico Broccoli, GLD3, LLC, and Snook-9 Realty, Inc. filed a third amended complaint against Lance Ashworth, Mara Farrell, Douglas Mackey, William Sandy, and Does 1–25. The complaint asserted one claim under the Racketeer Influenced and Corrupt Organizations Act (RICO), one RICO-conspiracy claim, and a state-law claim for tortious interference with business relations.

The defendants filed two motions to dismiss the third amended complaint: one filed by Douglas Mackey and one filed by Lance Ashworth, Mara Farrell, and William Sandy. They argued that the claims were barred by the applicable statutes of limitations and/or failed to state a claim. The court had dismissed the plaintiffs’ second amended complaint in its entirety in a prior related proceeding but had allowed the plaintiffs to amend.

RICO Statute of Limitations

The court held that civil RICO claims generally have a four-year statute of limitations, which begins when a plaintiff discovers or should have discovered the injury. Under the inquiry-notice rule, sufficiently serious warning signs can require a plaintiff to investigate even if the plaintiff does not yet know every detail of the alleged scheme.

The court concluded that the third amended complaint itself showed that the plaintiffs had received such warnings well before 2017. The allegations stated that the plaintiffs knew about various alleged acts when they occurred, saw publicly available articles about the alleged conduct, and hired a private investigator in 2014. The court found that these events showed that the plaintiffs discovered or should have discovered their alleged RICO injuries by 2014 at the latest. Because the lawsuit began in August 2021, the court ruled that the RICO claims were time-barred.

The court also rejected the plaintiffs’ argument that later conduct created new injuries that restarted the limitations period. It found that the later allegations concerned the same core injury—stopping or delaying the plaintiffs’ commercial development—and were derivative of that injury rather than new and independent injuries.

The court further held that the plaintiffs had not adequately pleaded fraudulent concealment, a theory that can sometimes extend the filing deadline. Even assuming the plaintiffs adequately alleged concealment, the court found that they did not plead with sufficient detail that they acted diligently to discover and pursue their claims after hiring the private investigator in 2014.

The court’s statute-of-limitations analysis applied to both the RICO claim under 18 U.S.C. § 1962(c) and the RICO-conspiracy claim under § 1962(d). It therefore dismissed both RICO claims as time-barred.

State-Law Claim

The plaintiffs also asserted a claim for tortious interference with business relations under state law. After dismissing the federal RICO claims, the court declined to exercise supplemental jurisdiction, meaning jurisdiction over the related state-law claim, and did not resolve the merits of that claim.

Disposition

The court granted both motions to dismiss. Because this was the first adjudication of the claims on statute-of-limitations grounds, the plaintiffs’ claims were dismissed without prejudice. The court allowed the plaintiffs 30 days to file a fourth amended complaint alleging additional facts and addressing the deficiencies identified in the opinion. The court stated that the fourth amended complaint would replace, rather than supplement, the earlier complaints, and that failure to file on time may result in dismissal of the action with prejudice.