     11-1390-cv
     Cohen v. Cohen




 1                                     UNITED STATES COURT OF APPEALS
 2                                         FOR THE SECOND CIRCUIT


 3                                                       August Term, 2012

 4                    (Argued: February 22, 2012                              Decided: April 3, 2013)


 5                                                    Docket No. 11-1390-cv


 6   - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X


 7   PATRICIA COHEN,
 8
 9                       Plaintiff-Appellant,

10   v.


11   S.A.C. TRADING CORP., S.A.C. CAPITAL MANAGEMENT, INC., S.A.C. CAPITAL
12   MANAGEMENT, LP, S.A.C. CAPITAL MANAGEMENT, LLC, S.A.C. CAPITAL
13   ADVISORS, LLC, S.A.C. CAPITAL ASSOCIATES, LLC, SIGMA CAPITAL
14   MANAGEMENT, LLC, BRETT LURIE, EDWARD BAO,
15
16                       Defendants,

17   STEVEN A. COHEN, DONALD T. COHEN, C.P.A., P.A.,
18
19                       Defendants-Appellees.
20
21   -------------------------------X

22




                                                                        1
 1   Before: LEVAL, SACK, HALL, Circuit Judges.

 2           Plaintiff Patricia Cohen appeals from a judgment of the United States District Court for
 3   the Southern District of New York (Holwell, J.) dismissing her claims for failure to state a claim
 4   and untimeliness. The Court of Appeals (Leval, J.) holds the claims were sufficiently stated and
 5   the Racketeer Influenced and Corrupt Organizations Act, common law fraud, and breach of
 6   fiduciary duty claims were timely, while the unjust enrichment claim was untimely and properly
 7   dismissed. Accordingly, the judgment of the district court is AFFIRMED IN PART and
 8   VACATED AND REMANDED IN PART.


 9                                                Howard W. Foster, Foster PC, Chicago, IL, for
10                                                Appellant.

11                                                Martin Klotz (John R. Oller, Jeffrey B. Korn, on the
12                                                brief), Willkie Farr & Gallagher LLP, New York,
13                                                NY, for Appellees.

14
15   LEVAL, Circuit Judge:

16          Plaintiff Patricia Cohen appeals from the judgment of the United States District Court for

17   the Southern District of New York (Holwell, J.) dismissing her claims against her ex-husband

18   Steven Cohen and his brother Donald Cohen for failure to state a claim and untimeliness.

19   Against both defendants, the complaint alleges a fraud-based violation of the Racketeer

20   Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962(d), common law fraud, and

21   breach of fiduciary duty. Against Steven, it alleges also unjust enrichment. We hold that the

22   district court’s reasons for dismissing the fraud-based claims were erroneous and that the court

23   erred in ruling on the existing record that the RICO, common law fraud, and breach of fiduciary

24   duty claims were time-barred. We sustain the dismissal of the unjust enrichment claim as

25   untimely.



                                                     2
 1   I. BACKGROUND

 2          The Second Amended Complaint (the “complaint”) alleges the following facts:

 3          Patricia and Steven were married in 1979. At the time, Steven was a trader at Gruntal &

 4   Co. (“Gruntal”). In January 1986, Steven created S.A.C. Trading Corporation (“SAC”), and

 5   served as its President, while his brother, defendant Donald, served as Treasurer, and Brett Lurie

 6   served as its Secretary and attorney. Donald also served as Patricia and Steven’s personal

 7   accountant and financial advisor, and Lurie served as Patricia’s attorney.

 8          In early 1986, Steven, through SAC, invested approximately $9 million with Lurie to

 9   purchase interests in real estate in New York City to be converted to co-op apartments (the

10   “Lurie Investment”). Later that year, Steven and Donald told Patricia that the entire value of the

11   Lurie Investment had been lost, whereas in fact, by January 1987, Lurie had returned $5.5

12   million of the investment in settlement of a claim Steven had brought against him. Patricia was

13   never told of Lurie’s payment. Steven continued to carry the Lurie Investment on SAC’s books

14   at $8,745,169. According to the complaint, Steven and Donald told Patricia that it was worthless

15   but could not be written off until the properties went into foreclosure or bankruptcy.

16          The 1989 Separation Agreement

17          Steven and Patricia separated in 1988 and eventually divorced. They reached a separation

18   agreement in 1989 (the “1989 Separation Agreement”). The 1989 Separation Agreement

19   provided that:

20          14.4. Each party has acknowledged a degree of familiarity with and knowledge of
21          the financial circumstances of the other and each party is of the opinion that he and
22          she are sufficiently informed of income, assets, property and financial prospects of
23          the other. Husband has provided wife with his net worth statement and the statement
24          of financial condition dated as of July 1, 1988, provided, however, that Husband


                                                      3
 1           makes no representation as to the value of the interest in a second and third mortgage
 2           on various properties involved in cooperative conversions in Queens, New York [the
 3           Lurie Investment] in which the investment was listed on his statement of financial
 4           condition dated as of July 1, 1988 at a value of $8,745,169.

 5           14.5 Each party acknowledges that respective counsel have advised that under the
 6           Equitable Distribution Law of the State they are each entitled to a full disclosure and
 7           valuation of all property owned by the other party and that the complete financial
 8           disclosure which could be required if this matter continued in litigation has not been
 9           obtained, but both parties have advised their counsel that they are aware of these
10           facts and desire to curtail discovery, are unwilling to litigate the issues and desire to
11           proceed with this Agreement on the limited financial data supplied to date and their
12           own knowledge of the other party’s financial affairs.

13   Joint App’x at 165-66 (emphasis added). It also included a provision to the effect that the

14   agreement is “entire and complete” and that “[n]o representations or warranties have been made

15   by either party to the other, or by anyone else, except as expressly set forth in this Agreement.”

16   Id. at 172.

17           During the negotiations leading to the 1989 Separation Agreement, Donald and Steven

18   prepared and sent to Patricia a “Statement of Financial Condition” (“Financial Statement”),

19   which purported to disclose all of Steven and Patricia’s marital assets as of July 1, 1988. The

20   Financial Statement listed Steven’s assets as totaling $18,229,527 (of which approximately

21   $200,000 was cash) and liabilities as totaling $1,298,990, for a total net worth of $16,930,537.

22   The Financial Statement reflected the Lurie Investment valued at $8,745,169. Steven’s lawyer

23   told Patricia that the Lurie money was “lost.” Id. at 76.

24           The 1992 Separation Agreement

25           In 1991, Patricia brought a motion in the Supreme Court of New York, seeking to

26   increase maintenance, child support, and other relief from the 1989 Separation Agreement and


                                                        4
 1   the March 13, 1990 divorce decree. She sought to set aside the financial provisions of the 1989

 2   Separation Agreement “upon the grounds that it is unconscionable and was procured by fraud

 3   and economic duress.” Order to Show Cause for Modification Upward of Child Support and

 4   Maintenance at 2, Cohen v. Cohen, No. 62593/90 (N.Y. Sup. Ct. Mar. 21, 1991). Patricia swore

 5   in an affidavit in support of her motion that Steven did not disclose his income for 1989, and

 6   “[t]his failure to disclose by itself should be sufficient to set aside the maintenance and support

 7   provisions of the Separation Agreement.” Affidavit of Patricia Cohen at 2-3, Cohen v. Cohen,

 8   No. 62593/90 (N.Y. Sup. Ct. Mar. 20, 1991). She also claimed that Steven “took everything else

 9   of value, primarily art works and his investment of $9.5 million in a real estate deal with Brett

10   Lurie.” Id. at 3. Additionally, her attorney affirmed in an affidavit:

11          [Patricia] and I believe that Mr. Cohen has not truthfully stated his income. Upon
12          information and belief, Mr. Cohen did one of the following: (1) had payments of his
13          income made to his wholly owned corporation, S.A.C. Trading Corp., (2) had
14          payments of his income made directly to his brother Donald, who is his accountant,
15          or (3) deferred payment of his compensation to a later year so that his income tax
16          return during 1989 did not show his true income.

17   Reply Affirmation of Martin S. Kera at 2, Cohen v. Cohen, No. 62593/90 (N.Y. Sup. Ct. May 8,

18   1991). Patricia also claimed that Steven misrepresented income he received from Gruntal.

19          In opposition, Steven stated that “[t]he Brett-Lurie deal is presently involved in

20   bankruptcy proceedings. Even [at the time the Financial Statement was prepared,] I suspected

21   that this would happen because the general partner [Lurie] was in default. I am writing it off as

22   totally worthless. Subtracting the value of Brett-Lurie from my net assets at that time means that

23   my net worth was $8,185,368.” Affidavit of Steven Cohen at 9, Cohen v. Cohen, No. 62593/90

24   (N.Y. Sup. Ct. May 1, 1991).


                                                       5
 1          Patricia later withdrew her argument that the 1989 Separation Agreement was procured

 2   by fraud and economic duress. Decision and Order, Cohen v. Cohen, No. 62593/90 (N.Y. Sup.

 3   Ct. Aug. 6, 1991). Instead, she and Steven executed an amended Settlement Agreement in

 4   January 1992.

 5          The Lawsuit

 6          In 2006, Patricia read an article about the fraud conviction of an individual who worked

 7   at Steven’s former employer, Gruntal, and began investigating the representations Gruntal had

 8   made to her during the 1989 and 1991 proceedings. Patricia asserts that, as a result of the

 9   investigation, in August 2008 she chanced upon a court file of a suit brought by Steven against

10   Brett Lurie, Steven Cohen and SAC Trading Corp. v. Brett Lurie and Conversion Funding Corp.,

11   No. 8981/87 (N.Y. Sup. Ct.), where she found reference to the $5.5 million payment from Lurie

12   to Steven. As a result of that discovery, on December 16, 2009, Patricia commenced this action

13   in the United States District Court for the Southern District of New York, alleging that, in falsely

14   representing the Lurie Investment as worthless and concealing the $5.5 million received on its

15   account, defendants conspired in violation of RICO, committed common law fraud, and

16   breached fiduciary duties, and that Steven was unjustly enriched.

17          On March 30, 2011, the district court granted a motion to dismiss all Patricia’s claims,

18   ruling that the complaint did not adequately allege fraud and that the claims were time-barred.

19   II. DISCUSSION

20          A. Sufficiency of the Pleading

21          Patricia contends the court erred in concluding that the allegations of her complaint were

22   insufficient. We review a district court’s grant of a motion to dismiss de novo, accepting as true


                                                      6
 1   the complaint’s factual allegations and drawing all inferences in the plaintiff’s favor. First

 2   Capital Asset Mgmt., Inc. v. Satinwood, Inc., 385 F.3d 159, 173 (2d Cir. 2004). “To survive a

 3   motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a

4    claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal

5    quotation marks omitted). Claims that sound in fraud are subject to the heightened pleading

6    standards of Fed. R. Civ. P. 9(b), which requires that averments of fraud be “state[d] with

7    particularity.” To satisfy this requirement, a complaint must “specify the time, place, speaker,

8    and content of the alleged misrepresentations,” “explain how the misrepresentations were

9    fraudulent and plead those events which give rise to a strong inference that the defendant[ ] had

10   an intent to defraud, knowledge of the falsity, or a reckless disregard for the truth.” Caputo v.

11   Pfizer, Inc., 267 F.3d 181, 191 (2d Cir. 2001) (alteration in original) (internal quotation marks

12   omitted). This standard also applies to allegations of fraudulent predicate acts supporting a RICO

13   claim. First Capital Asset Mgmt., 385 F.3d at 178-79.

14          Patricia’s claims are based on four allegedly fraudulent statements: (1) Steven and

15   Donald’s statement in 1986 that the entire value of the Lurie Investment had been lost; (2) the

16   statement of Steven and his attorney during the negotiations surrounding the 1989 Separation

17   Agreement that the Lurie Investment was “lost” but continued to be carried on the books at its

18   original value because it could not be written off until there was a bankruptcy or foreclosure

19   decree; (3) Steven’s statement in the 1989 Separation Agreement that he had “provided wife

20   with his net worth statement and the statement of financial condition dated as of July 1, 1988,”

21   Joint App’x at 165-66; and (4) Steven’s statement in his 1991 affidavit that he was writing off

22   the Lurie Investment as worthless and that the deduction of this investment from his net assets in

23   1989 reduced his net worth to $8,185,368.

                                                       7
 1          As to the first statement, made in 1986, we agree with the district court that the complaint

 2   did not sufficiently allege that it was fraudulent because there is no allegation that Steven and

 3   Donald knew or had reason to know at the time that Lurie would repay approximately 63% of

 4   the investment months later in 1987.

 5          As for the remaining allegedly fraudulent statements, we conclude that the reasons given

 6   by the district court in justification for finding them legally insufficient were not valid reasons.

 7   The second allegedly fraudulent statement specified in the complaint is the statement made by

 8   both Steven and his attorney that the money involved in the Lurie Investment “was lost.” The

 9   complaint asserts that this statement was fraudulent because Steven had in fact received from

10   Lurie a repayment of $5.5 million on account of the investment. The district court concluded this

11   did not sufficiently allege fraud because the $5.5 million received on account of the real estate

12   investment was separate from it, so that it was possible that the real estate Steven continued to

13   hold had a value of zero notwithstanding his previous receipt of $5.5 million on account of the

14   investment. Thus, under the district court’s reasoning, the statement was not false. But the

15   allegation was not simply that the Lurie Investment had a greater value at the time the statement

16   was made than the zero value Steven claimed. The allegation was also, alternatively, that Steven

17   falsely represented that the moneys invested with Lurie had been “lost,” whereas in fact only

18   one-third had been lost, given Lurie’s settlement payment. The court gave no adequate reason for

19   dismissing that claim of fraud.

20          The third allegedly fraudulent statement was Steven’s certification in the 1989 Separation

21   Agreement of the accuracy of the Financial Statement disclosed as part of the agreement, which

22   allegedly failed to include the $5.5 million received from Lurie. The district court concluded that


                                                       8
 1   these allegations were insufficient because Steven’s receipt of $5.5 million in 1987 was not

 2   incompatible with a financial statement as of July 1, 1988, showing a net worth of $8,185,368,1

 3   given the possibility that, in the intervening year, Steven had lost the $5.5 million or that the $5.5

 4   million was included in the larger amount of assets shown in the Financial Statement. The

 5   court’s reasoning is not persuasive and reflects a misunderstanding of Iqbal, which requires

 6   assertions of facts supporting a plausible inference of fraud—not of facts which can have no

 7   conceivable other explanation, no matter how improbable that explanation may be.

 8          Given the large size of the amounts involved and the relatively short time period between

 9   Steven’s receipt of $5.5 million and the Financial Statement, the more plausible inference was

10   that Steven had not lost, spent, or dissipated the $5.5 million by the time he set forth his assets

11   slightly over a year later. According to the district court’s reasoning, the passage of a week, a

12   day, even an hour or minute, between Steven’s receipt of the $5.5 million and his subsequent

13   certification of his assets would leave open the possibility that the entire amount might have

14   disappeared in the interval. The facts pleaded, however, support a plausible inference that he had

15   not frittered away two-thirds of his assets in that short time. The improbable (although

16   conceivable) possibility that he might have lost the money did not defeat the sufficiency of the

17   pleading, which supported a wholly plausible inference that he retained the money.

18          Nor was the second possibility considered by the court sufficient reason to dismiss the

19   complaint. It was indeed possible, as the district court speculated, that the $5.5 million received

20   from Lurie was shown in the Financial Statement, as a part of the total listed assets of


            1
             If the Lurie Investment, listed in the Financial Statement at $8,745,169, was in fact
     worth nothing, as Steven had allegedly told Patricia, Steven’s assets as reflected in the Financial
     Statement would have been $9,484,358, and his net worth would have been $8,185,368.

                                                       9
 1   $9,484,358 (after subtracting out the $8,745,169 listed for the worthless Lurie Investment). But

 2   this speculation failed to read the allegations of the complaint as a whole in context. Given the

 3   fact that the complaint also alleged that, shortly before, in the negotiations leading up to the 1989

 4   Separation Agreement, Steven had fraudulently concealed from Patricia his receipt of the $5.5

 5   million settlement by telling her that the Lurie Investment had been lost, the more plausible

 6   inference from the totality of the facts alleged was that Steven adhered to that course of conduct

 7   in reaching the 1989 Separation Agreement and did not suddenly change course, disclosing in

 8   good faith the assets he had so recently fraudulently concealed. Once again, Iqbal requires that

 9   the complaint assert facts that plausibly support the inference of fraud. It does not require that all

10   other conceivable possibilities be excluded. Given the plausible allegation that in negotiating the

11   1989 Separation Agreement Steven concealed his receipt of $5.5 million from Lurie and the

12   plausible allegation that he continued to conceal that money in his Financial Statement

13   incorporated into that agreement, we reject the district court’s conclusion that the pleading failed

14   the Iqbal test because of the conceivable possibility that the Lurie payment was disclosed in the

15   Financial Statement.

16          Because we conclude the reasons given by the district court for dismissal of the claims

17   based on fraud for failure to state a claim were erroneous, we vacate the judgment to the extent

18   based on inadequate pleading of the second, third, and fourth allegedly fraudulent statements,

19   and remand to the district court. We recognize that the defendants asserted additional grounds

20   for dismissal in their motion papers. We express no views on those, but leave them to be

21   considered on remand.2


            2
               Needless to say, the opinion should not be construed as expressing any view as to
     whether there is any merit in the claims of fraud. The question before us is limited to whether the
     allegations of the complaint are sufficient to go forward to be tested at trial. Our finding that they
     are sufficient suggests no belief one way or the other as to whether they are true.

                                                      10
 1          B. Statute of Limitations

 2          The court ruled that the claims under RICO, common law fraud, breach of fiduciary

 3   duties, and unjust enrichment were time-barred. As to the claim of unjust enrichment, we agree.

 4   As to the others, we believe the court erred.

 5                  1. Claims of RICO, Fraud, and Breach of Fiduciary Duty

 6          The statute of limitations for a civil RICO claim is four years. Rotella v. Wood, 528 U.S.

 7   549, 552 (2000); Agency Holding Corp. v. Malley-Duff & Assocs., 483 U.S. 143, 156 (1987).

 8   Under New York law, claims of common law fraud and of breach of fiduciary duty based on

 9   fraud are generally subject to six-year statutes of limitations.3 See Sargiss v. Magarelli, 12

10   N.Y.3d 527, 532 (2009); Kaufman v. Cohen, 307 A.D.2d 113, 118 (1st Dep’t 2003). In RICO

11   cases, we have applied a discovery accrual rule, under which the limitations period begins to run

12   “when the plaintiff discovers or should have discovered the RICO injury.” In re Merrill Lynch

13   Ltd. P’ships Litig., 154 F.3d 56, 58 (2d Cir. 1998); see also Rotella, 528 U.S. at 555. In other

14   words, “the limitations period does not begin to run until [the plaintiff has] actual or inquiry

15   notice of the injury.” In re Merrill Lynch, 154 F.3d at 60. The New York rule is similar as to

16   fraud and fraudulent breach of fiduciary duty. See Sargiss, 12 N.Y.3d at 532; Kaufman, 307

17   A.D.2d at 122-23.




            3
               More precisely, the New York statute of limitations for a common law fraud claim is
     “the greater of six years from the date the cause of action accrued or two years from the time the
     plaintiff or the person under whom the plaintiff claims discovered the fraud, or could with
     reasonable diligence have discovered it.” N.Y. C.P.L.R. § 213(8). Additionally, the statute of
     limitations for breach of fiduciary duty claims is either three or six years, depending on the
     nature of the relief sought by the plaintiff. See IDT Corp. v. Morgan Stanley Dean Witter & Co.,
     12 N.Y.3d 132, 139 (2009). These nuances, however, do not affect our analysis.

                                                      11
 1           With respect to inquiry notice, a duty to inquire is triggered by information that “relates

 2   directly to the misrepresentations and omissions the Plaintiffs later allege in their action against

 3   the defendants.” Newman v. Warnaco Grp., 335 F.3d 187, 193 (2d Cir. 2003). The triggering

 4   information “need not detail every aspect of the [subsequently] alleged fraudulent scheme.”

 5   Staehr v. Hartford Fin. Servs. Grp., 547 F.3d 406, 427 (2d Cir. 2008). In turn, the date on which

 6   knowledge of a fraud will be imputed to a plaintiff can depend on the plaintiff’s investigative

 7   efforts. If the plaintiff makes no inquiry once the duty to inquire arises, “‘knowledge will be

 8   imputed as of the date the duty arose.’” Lentell v. Merrill Lynch & Co., 396 F.3d 161,168 (2d

 9   Cir. 2005) (quoting LC Capital Partners, LP v. Frontier Ins. Grp., 318 F.3d 148, 154 (2d Cir.

10   2003)). And “if some inquiry is made, ‘[the court] will impute knowledge of what [a plaintiff] in

11   the exercise of reasonable diligence[] should have discovered concerning the fraud, and in such

12   cases the limitations period begins to run from the date such inquiry should have revealed the

13   fraud.’” Lentell, 396 F.3d at 168 (quoting LC Capital Partners, 318 F.3d at 154) (third alteration

14   in original). Although determining whether a plaintiff had sufficient facts to place her on inquiry

15   notice is “often inappropriate for resolution on a motion to dismiss,” we have found dismissal

16   appropriate “‘[w]here . . . the facts needed for determination of when a reasonable [plaintiff] of

17   ordinary intelligence would have been aware of the existence of fraud can be gleaned from the

18   complaint and papers . . . integral to the complaint.’” LC Capital Partners, 318 F.3d at 154

19   (quoting Dodds v. Signa Sec., Inc., 12 F.3d 346, 352 n.3 (2d Cir. 1993)) (second and fourth

20   alterations in original).

21           The district court concluded that, in 1991, Patricia was on inquiry notice of Steven’s

22   fraudulent concealment of the $5.5 million Lurie payment. The reasoning supporting that

23   conclusion was the following: In 1991, when Patricia moved for increased support payments, she

                                                      12
1    suspected Steven of concealing some payments she believed were due him and she found in her

2    contemporaneous investigation that he was owed some income he had not revealed to her. She

3    also suspected Steven of falsely understating the value of the Lurie Investment when he told her

4    it was worthless. Years later, while investigating her suspicions that Steven had received

5    undisclosed Gruntal income, Patricia happened upon court records of Steven’s suit against Lurie.

 6   These circumstances, in the district court’s view, put Patricia on inquiry notice, requiring

 7   investigation which would have revealed the concealed $5.5 million payment.

 8          We disagree with the district court that those circumstances put Patricia on inquiry notice

 9   in 1991 of Steven’s alleged fraud with respect to his concealment of the Lurie payment. We

10   believe there were at least two flaws in the district court’s reasoning. First, the court appears to

11   have assumed that because Patricia had suspicions in 1991 and did not find the Lurie payment, it

12   follows that her investigation at the time was less than reasonable. There is no basis in the record

13   for that conclusion. Inquiry notice imposes an obligation of reasonable diligence. See Lentell,

14   396 F.3d at 168 (the court “‘will impute knowledge of what [a plaintiff] in the exercise of

15   reasonable diligence[] should have discovered’” (emphasis added) (quoting LC Capital

16   Partners, 318 F.3d at 154)). Assuming that Patricia’s awareness in 1991 of information

17   indicating that Steven had concealed and underreported his 1989 income from Gruntal in the

18   1989 Separation Agreement should have made her suspicious of more widespread concealment

19   of assets, triggering a duty to inquire, see Staehr, 547 F.3d at 434, it does not follow that she was

20   chargeable with an awareness of any and all monies Steven may have received and concealed,

21   regardless of whether a reasonable investigation based on what she knew would have revealed it.

22   The district court had no basis on the record before it to conclude that the investigation that

23   Patricia made in 1991 was not reasonable.

                                                      13
 1          Second, even assuming that the duty to make a reasonable investigation in 1991, given

 2   what Patricia knew, required her to do more than she did, there is no adequate reason on this

 3   record to conclude that such further reasonable diligence would have revealed the Lurie lawsuit.

 4   While in some cases we have found that a plaintiff, in the exercise of reasonable diligence,

 5   should have discovered public lawsuits, see, e.g., Berry Petroleum Co. v. Adams & Peck, 518

 6   F.2d 402, 410 (2d Cir. 1975), abrogated on other grounds by Menowitz v. Brown, 991 F.2d 36

 7   (2d Cir. 1993) (plaintiff of reasonable diligence would have discovered alleged fraud at same

 8   time as earlier well-publicized lawsuits against defendant by the SEC and other private plaintiffs

 9   alleging the same fraud), it does not follow that reasonable diligence will in all circumstances

10   result in discovery of any lawsuit. The facts in the present record do not support a conclusion

11   that reasonable diligence would have uncovered Steven’s lawsuit against Lurie, as the

12   information available to Patricia in 1991 did not suggest in any way that Steven had sued Lurie,

13   much less that he received a concealed payment in settlement of the suit. There is no indication

14   that the suit received any publicity, or that it “result[ed] in published or broadly disseminated

15   opinions.” Staehr, 547 F.3d at 435. Furthermore, that suit was brought by Steven. It was not a

16   suit against Steven accusing him of fraud. While one who suspects a defendant of widespread

17   fraud may be under a duty to see if others have sued the defendant and whether such suits

18   revealed evidence of the fraud of which the plaintiff complains, the fact that Patricia suspected

19   Steven of defrauding her does not logically suggest that she was under a duty to investigate to

20   see what suits Steven may have brought against others. Additionally, the fact learned in

21   hindsight that Patricia discovered Steven’s suit against Lurie in a later investigation does not

22   mean, based on our review of the record, that she would have discovered the Lurie payment in


                                                      14
 1   the course of a reasonable investigation in 1991. While hindsight shows that the fraud could have

 2   been discovered, that fact does not support the conclusion that, on reasonable inquiry, the fraud

 3   would have been discovered. Cf. Int’l Ladies’ Garment Workers Union, AFL-CIO v. N.L.R.B.,

 4   463 F.2d 907, 923 (D.C. Cir. 1972) (“To be sure, once the clue is uncovered its significance

 5   seems patent and its discovery easy, but it is not a new phenomenon that the seemingly obvious

 6   becomes so only after its discovery has eluded a good many others. Hindsight does not convict

 7   these others of want of reasonable diligence.”).

 8          Nor did the fact that Patricia had and expressed suspicions in 1991 that Steven was lying

 9   in telling her that the Lurie Investment was worthless put her on inquiry notice of the concealed

10   fact that he had sued Lurie and received a $5.5 million settlement payment. We reach this

11   conclusion for several reasons. For one, the suspicion she expressed had nothing to do with a

12   possibility that Steven might have had a dispute with Lurie and received a concealed case

13   settlement. To the contrary, her suspicion was that the Lurie Investment, which Steven told her

14   was worthless, in fact had value. Second, inquiry notice is triggered by awareness of facts which

15   a reasonable person would investigate; it is not triggered by unfounded suspicions. So far as the

16   record revealed, Patricia’s suspicions that Steven had concealed payments due him and that the

17   Lurie Investment was more valuable than Steven claimed were based on nothing but intuition or

18   wishful thinking. The record includes no fact known to Patricia in 1991 that gave rise to any duty

19   to investigate the Lurie matter. The fact that she distrusted her former husband and thought he

20   might be lying is not an objective fact that supports a duty to investigate.




                                                        15
1           We conclude that, at least on the record before the district court, there was no basis to

2    dismiss Patricia’s fraud-based claims as untimely. We vacate those rulings and reinstate these

 3   claims.4

 4                  2. Unjust Enrichment Claim

 5          We agree with the district court that Patricia’s claim for unjust enrichment is time-barred.

 6   Under New York law, the six-year limitations period for unjust enrichment accrues “upon the

 7   occurrence of the wrongful act giving rise to a duty of restitution and not from the time the facts

 8   constituting the fraud are discovered.” Coombs v. Jervier, 74 A.D.3d 724, 724 (2d Dep’t 2010)

 9   (internal quotation marks omitted). The latest-in-time wrongful act pleaded in the complaint

10   occurred in 1991, when Steven allegedly stated that he was writing the Lurie Investment off as

11   worthless and that his net worth as of 1989 was approximately $8 million. The claim for unjust

12   enrichment, instituted in 2009, was well outside the six-year statute of limitations.

13   III. CONCLUSION

14          For the foregoing reasons, we VACATE the district court’s judgment dismissing

15   plaintiff’s claims based in fraud and breach of fiduciary duty as time-barred and for failure to

16   state a claim upon which relief may be granted, and REMAND those claims for further

17   proceedings not inconsistent with the opinion. We AFFIRM the dismissal of the claim of unjust

18   enrichment, as time-barred.




            4
               We address only whether the claims are time-barred based on the record before the
     district court, which consisted solely of plaintiff’s complaint. Our finding that the record before
     the district court cannot support the district court’s conclusion that the fraud-based claims were
     time-barred is not intended to suggest or express any view with respect to any future statute of
     limitations argument based on proven facts.

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