United States Court of Appeals, District of Columbia Circuit
April 12, 2019
from the United States District Court for the District of
Columbia (No. 1:17-cv-01756)
M. Temple argued the cause and filed the briefs for
Lindsay D. Breedlove argued the cause and filed the brief for
Before: Tatel, Millett, and Katsas, Circuit Judges.
MILLETT, CIRCUIT JUDGE.
case concerns the proper application of the discovery rule to
tortious interference claims under District of Columbia law.
The district court determined that the lawsuit filed by
plaintiff Capitol Services Management, Inc. was barred by the
statute of limitations because Capitol Services was on
"inquiry notice" of the defendant's alleged
interference with its contract long before the limitations
period expired. But at the motion-to-dismiss stage, dismissal
on statute-of-limitations grounds is permissible only if a
plaintiff's claims are conclusively time-barred on the
face of the complaint. That strict standard was not met here,
so we reverse and remand the case for further proceedings.
Park Southern building (the "Property") is an
apartment complex located in Southeast Washington, D.C. In
2006, the Park Southern Neighborhood Corporation ("Park
Southern") acquired the Property from its prior owner,
the District of Columbia, subject to a Deed of Trust. Under
the terms of their agreement, if Park Southern defaulted on
the terms of the Deed, the District could resume control of
Southern contracted with Vesta Corporation to serve as the
Property's manager. However, Park Southern eventually
became dissatisfied with Vesta's performance and, in
March 2014, terminated its contract. Park Southern and
Capitol Services then entered into a one-year management
agreement that would then continue on a "year-to-year
basis," unless either party terminated it with three
months' notice. Complaint ¶¶ 9-10, J.A. 6.
officials began talking almost immediately about Park
Southern's management reshuffle. Milton Bailey, a
District employee, emailed the Mayor's chief of staff
advising that "'[w]e already have enough to send
default and foreclosure notices' to effectively takeover
[sic] the property." Complaint ¶ 13, J.A.
7. In a telephone call in late March, Vesta relayed to Bailey
its intent to "continue to manage the property and to
provide [the District with] whatever assistance [it] need[s]
with respect to the ongoing condition of the property."
Id. ¶ 16, J.A. 7. Vesta also communicated with
the District by private email, and participated in at least
five other conference calls regarding Capitol Services, the
Property's "management issues," and Vesta's
"interests." Id. ¶¶ 17-18, J.A.
came to a head on May 2, 2014, when the District exercised
its default remedy under the Deed of Trust and immediately
took over the Property. That same day, without providing any
notice to Capitol Services, the District entered into an
"emergency contract" with Vesta, authorizing it to
take over property management duties from Capitol Services
the very next day.
Services filed suit against the District in Superior Court in
July 2014. It filed an amended complaint against the District
in October 2014, asserting (as relevant here) claims of
tortious interference with contract and with business
opportunity. In July 2016, as part of discovery in that
action, Capitol Services deposed Milton Bailey. In Capitol
Services' view, Bailey's testimony "revealed
considerable evidence" of Vesta's alleged tortious
interference. J.A. 57. Yet with respect to its claims against
the District, Capitol Services came up short. In a May 2017
opinion, the Superior Court entered judgment for the
District, finding that the court lacked jurisdiction because
the District was entitled to sovereign immunity. The court
also ruled that Capitol Services had failed to establish a
prima facie case of tortious interference by the
August 28, 2017, Capitol Services filed suit against Vesta in
the United States District Court for the District of
Columbia. Its complaint asserted claims for tortious
interference with business relations and tortious
interference with reasonable expectation of prospective
economic advantage. Vesta moved to dismiss, asserting that
(i) Capitol Services' claims were time-barred; (ii)
Capitol Services was collaterally estopped from relitigating
issues decided in the Superior Court action; and (iii)
Capitol Services failed to state claims for which relief
could be granted.
only the first issue, the district court agreed that the
statute of limitations barred the suit. The court ruled that
the District's three-year statute of limitations for
tortious interference claims began to run on May 3, 2014,
when the District terminated Capitol Services' contract
and substituted Vesta in its place. Because Capitol Services
did not file suit until August 28, 2017, the court dismissed
the lawsuit as untimely.
ruling, the district court rejected Capitol Services'
rejoinder that the discovery rule delayed the start of the
limitations period until July 2016, when Capitol Services
deposed Milton Bailey as part of the Superior Court action.
In the district court's view, Capitol Services was on
inquiry notice of its claims against Vesta as soon as the
District ended the contract because, at that point, Capitol
Services had "reason to suspect that [Vesta] did some
wrong." J.A. 111. The court added that Capitol Services
surely was on inquiry notice far earlier than Bailey's
deposition because Capitol Services' Superior Court
amended complaint against the District alleged Vesta's
involvement in terminating its management agreement.
Services timely appealed.
district court had diversity jurisdiction under 28 U.S.C.
§ 1332(a)(1). This court's jurisdiction rests on 28
U.S.C. § 1291.
review de novo a Rule 12(b)(6) dismissal on
statute-of-limitations grounds, accepting plaintiff's
well-pleaded factual allegations as true and drawing all
reasonable inferences in plaintiff's favor. Momenian
v. Davison, 878 F.3d 381, 387 (D.C. Cir. 2017). At the
motion to dismiss stage, dismissal on statute-of-limitations
grounds is proper "only if the complaint on its face is
conclusively time-barred." Commonwealth Land Title
Ins. Co. v. KCI ...