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Carter v. Curators of University of Missouri

United States District Court, W.D. Missouri, Southwestern Division

March 27, 2019

JOSHUA CARTER, Plaintiff,
v.
CURATORS OF THE UNIVERSITY OF MISSOURI; GEORGE HARRIS; CARY CHELLADURAI; AND KRISTEN KLEFFNER, Defendants.

          ORDER

          ROSEANN A. KETCHMARK, JUDGE UNITED STATES DISTRICT COURT

         Plaintiff Joshua Carter (“Carter”) brings this action for damages against Defendant The Curators of the University of Missouri, and individual UMKC administrators, Defendants Steven Kanter, [1] George Harris (“Harris”), Cary Chelladurai (“Chelladurai”), and Kristen Kleffner (“Kleffner”) (collectively, “Defendants”). Before the Court is Harris' motion to dismiss.[2](Doc. 35.) The motion is fully briefed. (Docs. 36, 38, 39.) For the reasons below, the motion to dismiss is GRANTED in part. The Complaint is DISMISSED as to the civil RICO claim as time-barred by the statute of limitations. The case is REMANDED to state court.

         Background

         Carter is a UMKC alum. In 2011, Carter enrolled in a dual-degree program at UMKC, in which a student could obtain both an undergraduate and medical school degree in six years (the “Program”). On March 2, 2018, Carter filed this lawsuit against The Curators of the University of Missouri and individual UMKC administrators. According to the Complaint, Carter's injury began in 2012, when Defendants required him to extend his medical school education a year by entering an alternate program after he received a failing grade in a second-year course. Carter alleges that he chose to extend his education in reliance on Defendants' representations-made in email, in a telephone conversation, and in a student handbook-that the additional coursework would count toward his degree and help bolster his GPA. Carter claims the representations were false. Defendants subsequently refused to count the additional coursework toward his degree or toward his GPA.

         Carter adds that from 2011 to 2016, Defendants made an additional representation to him that student transcripts will contain separate GPAs for undergraduate and medical school programs. According to Carter, despite this representation, in June 2016, Defendants refused to compute separate GPAs in Carter's transcript for his undergraduate and medical school coursework.

         Carter raises one federal claim and three state law claims stemming from Defendants' representations. Carter alleges that Defendants committed several acts of mail and wire fraud, thereby violating the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and causing him injury (Count I). Carter alleges that Defendants' conduct in connection with his decision to extend his medical school education violated the Missouri Merchandising Practices Act (“MMPA”) (Count II). Carter also alleges that Defendants breached their promises to him that he would receive a degree following completion of courses and other requirements (Counts III and IV).

         In June 2018, Kanter, Chelladurai, and Kleffner removed the action to this Court based on the RICO claim pursuant to federal question jurisdiction.[3] (Doc. 1.) Following removal, the Court granted Carter's unopposed motion to amend his complaint and Carter filed his First Amended Complaint (the “Complaint”). (Doc. 27.) Harris moves to dismiss the Complaint as time-barred and pointing out that Carter filed suit six years after he was required to repeat a year. Harris maintains that Carter could not file suit unless his claims had accrued within the four or five years prior to filing, according to the applicable limitations periods for Carter's civil RICO claim (four years) and state law claims (five years).[4]

         Legal Standard

         “A court may dismiss a complaint under Federal Rule of Civil Procedure 12(b)(6) as barred by a statute of limitations if the complaint itself shows that the claim is time-barred.” Hartig Drug Co. v. Ferrellgas Partners, L.P. (In re Pre-Filled Propane Tank Antitrust Litig.), 860 F.3d 1059, 1063 (8th Cir. 2017) (citations omitted). In the context of a motion to dismiss, the Court “accept[s] the well-pled allegations in the complaint as true and draw[s] all reasonable inferences in the plaintiff's favor.” Meiners v. Wells Fargo & Co., 898 F.3d 820, 821 (8th Cir. 2018). Under Missouri law, statutes of limitations are favored and any exceptions, such as tolling, are strictly construed. Graham v. McGrath, 243 S.W.3d 459, 464 (Mo. App. 2007); Owen v. General Motors Corp., 533 F.3d 913, 920 n.5 (8th Cir. 2008).

         Discussion

         A. RICO Claim

         “RICO provides for civil actions . . . by which ‘any person injured in his business or property' by a RICO violation may seek treble damages and attorney's fees.” Rotella v. Wood, 528 U.S. 549, 552 (2000) (citing 18 U.S.C. § 1964(c)). The limitations period for civil RICO claims is four years. Klehr v. A.O. Smith Corp., 521 U.S. 179, 183 (1997) (citing Agency Holding Corp. v. Malley-Duff & Associates, Inc., 483 U.S. 143, 156 (1987)). When civil RICO claims involve fraud, the discovery accrual rule applies, which “dictates that the limitations period begins to run when the facts constituting fraud were discovered or, by reasonable diligence, should have been discovered.” Hope v. Klabal, 457 F.3d 784, 790 (8th Cir. 2006) (citations and internal quotations omitted). In applying the discovery accrual rule, “discovery of the injury, not discovery of the other elements of a claim, is what starts the clock.” Rotella, 528 U.S. at 555.

         The Court concludes that the Complaint itself shows that Carter's civil RICO claim initially accrued more than four years before he filed suit on March 2, 2018. Accepting the allegations as true and viewing them in Carter's favor, at the latest, the facts constituting fraud were discovered by Carter by October 2013. According to the Complaint, by October 2013, Carter was aware that the additional coursework would not count toward a degree or bolster his GPA despite earlier representations. Carter may not have been aware of the full extent of his injury at this time, but Carter knew he had been required to repeat a year unnecessarily and he would not receive “any tangible benefit” from the additional coursework. (Id. at ¶¶ 36, 55-56, 58.); see Rotella, 528 U.S. at 555 (“The prospect is not so bleak for a plaintiff in possession of the critical facts that he has been hurt and who has inflicted the injury.”).

         Carter's counter arguments do not save his RICO claim. First, Carter asserts that the issue of when Carter discovered Defendants' fraudulent conduct is a fact-intensive inquiry that the Court cannot resolve at this stage of the litigation. However, the inquiry is proper for resolution on a motion to dismiss because the Complaint contains allegations of when Carter discovered the facts constituting fraud. See Hope, 457 F.3d at 790 (“Ordinarily, a plaintiff's reasonable diligence . . . will be questions of fact for a jury, but ‘[w]here ...


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