Commercial Litigation and Arbitration

Howard Hughes and RICO — Fraudulent Concealment Unavailing to Revive 30-Year-Old Claim Against Hughes’ Estate

The Melvin Dummar/Howard Hughes relationship not only lives on in film. In Dummar v. Lummis, 2008 U.S. App. LEXIS 19513 (10th Cir. Sept. 12, 2008), Mr. Dummar maintained that almost 30 years after an unsuccessful suit for a portion of the Hughes estate based on a holographic will, he obtained information regarding misconduct related to the trial he lost in the 1970s and commenced a civil RICO action. He acknowledged the existence of a four-year statute of limitations but claimed fraudulent concealment applies to RICO:

Mr. Dummar asserts, however, that "[o]n federal causes of action, fraudulent concealment is read into every statute of limitations." *** From this we gather that he means to argue, as he did before the district court, that the limitations period should be tolled because of fraudulent concealment of the alleged RICO activity. The Supreme Court has recognized that equitable tolling may be available under RICO, see Rotella, 528 U.S. at 560-61, and we have stated that a RICO cause of action can be tolled by fraudulent concealment when the plaintiff establishes

(1) the use of fraudulent means by the party who raises the ban of the statute; (2) successful concealment from the injured party; and (3) that the party claiming fraudulent concealment did not know or by the exercise of due diligence could not have known that he might have a cause of action.

[Citations omitted.]

Mr. Dummar has made no attempt on appeal to show that he pleaded the elements of fraudulent concealment. At any rate, such an attempt would be futile. To begin with, he has not adequately alleged "successful concealment from [Mr. Dummar]" of an element of his cause of action. [Factual discussion omitted.] ***

Even if we were also to consider allegations of wrongdoing not specifically referred to in the Complaint as fraudulent concealment, we would not find anything adequately alleging fraudulent concealment. Paragraph 22 of the Complaint alleges that Defendants ordered, bribed, and coerced Hughes's aides to commit perjury. This allegation supports an element of the RICO claim — namely, that Defendants bore responsibility for the perjury and other misconduct in the probate proceedings. But there is no allegation in the Complaint, or suggestion elsewhere in the record, that Mr. Dummar acquired any specific evidence of this misconduct during the four years before filing the Complaint. On the contrary, the allegations in paragraph 22 appear to be merely inferences by Mr. Dummar. Paragraph 19 of the Complaint states that "based upon their positions of control in [Hughes's enterprises], their personal involvement in the litigation and trial, as well as their personal motives and other facts alleged [in the Complaint], Plaintiff reasonably believes and alleges that Defendants . . . knew of and coordinated [the aides'] false testimony." *** We question whether the allegations of paragraph 22 are pleaded with sufficient particularity to support a claim of fraudulent concealment; but in any event, the absence of an allegation regarding how and when Mr. Dummar learned of the alleged misconduct forecloses a claim that Defendants' fraudulent concealment prevented Mr. Dummar from discovering Defendants' involvement until at least 2002--four years before filing suit. If the allegations in the paragraph are based on information acquired only in recent years, the Complaint needed to assert that.

***Mr. Dummar has failed to explain why he could not have inferred Defendants' involvement in the perjury until more than 26 years after the probate trial. ***Not only has Mr. Dummar not alleged the concealment necessary to satisfy the second element of a claim of fraudulent concealment, but he has also not alleged the due diligence necessary to satisfy the third element. *** The Complaint is completely silent as to any efforts that Mr. Dummar made to uncover his cause of action during the first 26 years after the probate trial.

Held, “Mr. Dummar did not show entitlement to equitable tolling, and his claim is therefore barred by the civil RICO limitations period. Dismissal of this claim was proper.”

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