Commercial Litigation and Arbitration

RICO Statute of Limitations — Accrual: Actual or Inquiry Notice — Equitable Tolling — Courts Have Inherent Flexibility to Choose Grounds for Disposing of a Case without Reaching the Merits

Garrasi v. Wells Fargo Bank, N.A., 2024 WL 191802 (2d Cir. Jan. 18, 2024) (unpublished):


Appellant Robert Garrasi appeals from a judgment of the United States District Court for the Northern District of New York (Gary L. Sharpe, District Judge), entered on March 30, 2022, granting Defendants-Appellees’ motions to dismiss. Garrasi, proceeding pro se, sued Wells Fargo Bank and others, alleging claims under the Racketeer Influenced and Corrupt Organizations (“RICO”) Act and N.Y. Judiciary Law § 487. Garrasi alleges that the defendants engaged in a RICO enterprise to fraudulently foreclose on his property. The district court dismissed the RICO claim as untimely and declined to exercise supplemental jurisdiction over the N.Y. Judiciary Law claim. We assume the parties’ familiarity with this case.

“We review the grant of a motion to dismiss de novo, accepting as true all factual claims in the complaint and drawing all reasonable inferences in the plaintiff’s favor.” Fink v. Time Warner Cable, 714 F.3d 739, 740–41 (2d Cir. 2013). Because “[t]he lapse of a limitations period is an affirmative defense that a defendant must plead and prove,” it may be raised in a Fed. R. Civ. P. 12(b) motion to dismiss only if the defense appears on the face of the complaint.1 Staehr v. Hartford Fin. Servs. Grp., Inc., 547 F.3d 406, 425 (2d Cir. 2008); see Harris v. City of New York, 186 F.3d 243, 250 (2d Cir. 1999) (“[I]n the statute of limitations context ... dismissal is appropriate only if a complaint clearly shows the claim is out of time.”).

Civil RICO claims are governed by a four-year limitations period. Rotella v. Wood, 528 U.S. 549, 552 (2000). “In a RICO case, the first step in the statute of limitations analysis is to determine when the plaintiff sustained the alleged injury for which the plaintiff seeks redress. The court then determines when the plaintiff discovered or should have discovered the injury and begins the four-year statute of limitations period at that point.Koch v. Christie’s Int’l PLC, 699 F.3d 141, 150 (2d Cir. 2012) (internal quotation marks and brackets omitted). Thus, a civil RICO claim accrues when a plaintiff has “actual or inquiry notice of the injury.” Id. at 151 (internal quotation marks omitted).

Here, the district court properly concluded that Garrasi’s RICO claim accrued in July 2016. The alleged purpose of the RICO enterprise was to fraudulently foreclose on the subject property. Garrasi became aware of the foreclosure at least by July 2016, when he intervened in the foreclosure action in state court. Even assuming arguendo that Garrasi could not have discovered the alleged fraud at that point, he surely had actual or inquiry notice by late 2016 when he filed an amended answer and counterclaims in which he expressly argued that various defendants unlawfully transferred and acquired the mortgage and notes. Nevertheless, he did not file his complaint until February 22, 2021, more than four years after his claim accrued, and so it was untimely.

*2 Garrasi responds that he was not injured by the foreclosure action (or by his motion to intervene in the foreclosure action) but rather by the expenditure of legal fees. But this directly contradicts the allegations in his complaint, which state that a fraudulent foreclosure and removal of rights to his property was the injury caused by (and the purpose of) the defendants’ alleged fraud. Further, even if the legal expenditures were the actual injury, Garrasi was aware that he would likely incur legal expenses when he intervened in the foreclosure action in 2016 even if he did not choose to retain counsel until 2018.

Moreover, the district court did not err by concluding that equitable tolling does not apply in this case. “Equitable tolling is a doctrine that permits courts to extend a statute of limitations on a case-by-case basis to prevent inequity.” Doe v. United States, 76 F.4th 64, 71 (2d Cir. 2023) (internal quotation marks omitted). “Generally, a litigant seeking equitable tolling bears the burden of establishing two elements: (1) that he has been pursuing his rights diligently, and (2) that some extraordinary circumstance stood in his way.” Smalls v. Collins, 10 F.4th 117, 145 (2d Cir. 2021) (internal quotation marks omitted). Garrasi did not plead or otherwise sufficiently demonstrate that an extraordinary circumstance stood in the way of his filing his claim. Id. He asserts that the defendants concealed the truth of their fraudulent actions and that he acted diligently as soon as he had notice in November 2018 of the possible fraud. But Garrasi could have discovered the alleged fraud at the time he intervened in the foreclosure. As a part of his defense, he would have needed to inquire about the validity of the foreclosure, including the chain of assignments that gave the defendants standing to bring the foreclosure action. Given that mortgage assignments are publicly recorded, Garrasi’s argument that he did not have sufficient evidence of fraud in 2016 is unpersuasive.

Finally, because the district court dismissed Garrasi’s RICO claim, the only claim over which it had original jurisdiction, it did not abuse its discretion by declining to exercise supplemental jurisdiction over his N.Y. Judiciary Law claim at this early stage in the litigation. See Kolari v. N.Y.-Presbyterian Hosp., 455 F.3d 118, 122 (2d Cir. 2006) (“[A] district court may decline to exercise supplemental jurisdiction if it has dismissed all claims over which it has original jurisdiction.” (internal quotation marks omitted)).

We have considered Garrasi’s remaining arguments and find them to be unpersuasive. Accordingly, we AFFIRM the judgment of the district court.



The Clerk of Court is directed to amend the caption as set forth above.


Although defendants also argue that the district court lacked subject matter jurisdiction due to various abstention doctrines, “we and the Supreme Court have reaffirmed that federal courts maintain the inherent flexibility ... to choose among threshold grounds for disposing of a case without reaching the merits.” Cavanaugh v. Geballe, 28 F.4th 428, 432 n.4 (2d Cir. 2022) (internal quotation marks omitted). Accordingly, we may consider the statute of limitations issue first.


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