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BRADLEY v. NATIONAL ASS'N OF SEC. DEALERS DISPUTE

January 28, 2003

THERESA BRADLEY, PLAINTIFF,
V.
NATIONAL ASSOCIATION OF SECURITIES DEALERS DISPUTE RESOLUTION, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Reggie B. Walton, District Judge

MEMORANDUM OPINION

This matter comes before the Court upon the defendants' motion to dismiss the plaintiff's complaint pursuant to Rules 12(b)(2) and 12(b)(6) of the Federal Rules of Civil Procedure.*fn1 This action arises out of arbitration proceedings conducted by defendant National Association of Securities Dealers Dispute Resolution, Inc. ("NASD"). The defendants assert as grounds for their dismissal motion the following: (1) the plaintiff's claims are barred by the applicable statute of limitations; (2) the Federal Arbitration Act ("FAA") bars a collateral attack on an arbitration award; (3) there is no private cause of action for a violation of the applicable arbitration rules; (4) the defendants are entitled to absolute immunity; and (5) the plaintiff has failed to state a claim upon which relief can be granted for professional negligence, fraud, abuse of process, and intentional infliction of emotional distress.

Defendants' Motion to Dismiss ("Defs.' Mot.") at 1-26.*fn2 Upon consideration of the parties' submissions and for the reasons set forth below, the Court will grant the defendants' motion to dismiss this case because the statute of limitations had expired as to each of the plaintiff's claims when she filed her complaint.*fn3

I. Factual Background

The events giving rise to the complaint being filed began on February 26, 1992, when the plaintiff opened up an investment account with Dean Witter Reynolds, Inc. ("Dean Witter"). Complaint ("Compl.") ¶ 10. The plaintiff asserts that over the next several months "Dean Witter destroyed a $750,000 stock and bond portfolio in 1992 consisting of [p]laintiff'[s] 30-year professional earnings, life savings, sole income and only source of income." Id. Distraught over this event, the plaintiff initiated an arbitration proceeding on October 24, 1994 with the NASD, asserting that Dean Witter, and its brokers that she dealt with, committed several violations of the Securities Exchange Act of 1934. Id. On January 7, 1998, a panel of NASD arbitrators dismissed the plaintiff's complaint with prejudice and the plaintiff was apparently required to pay a fee of $1,900.00. Compl. ¶ 39. The plaintiff then attempted to vacate this award in the Circuit Court of the Seventeenth Judicial Circuit for Broward County, Florida. Defendants' Memorandum of Points and Authorities in Support of their Motion to Dismiss the Complaint ("Defs.' Mem.") at 1. After remanding the case for clarification of the award, the arbitral panel affirmed the dismissal on February 24, 1999. Compl. ¶ 40; Defs.' Mem. at 1. The plaintiff subsequently initiated the instant cause of action on September 26, 2001.

II. Standard of Review Under Rule 12(b)(6)

On a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6), this Court must construe the allegations and facts in the complaint in the light most favorable to the plaintiff and must grant the plaintiff the benefit of all inferences that can be derived from the alleged facts. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Kowal v. MCI Communications Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). However, the Court need not accept inferences or conclusory allegations that are unsupported by the facts set forth in the complaint. Kowal, 16 F.3d at 1276. In deciding whether to dismiss a claim under Rule 12(b)(6), the Court can only consider the facts alleged in the complaint, documents attached as exhibits or incorporated by reference in the complaint, and matters about which the Court may take judicial notice. E.E.O.C. v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624-25 (D.C. Cir. 1997). The Court will dismiss a claim pursuant to Rule 12(b)(6) only if the defendant can demonstrate "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley, 355 U.S. at 45-46.

III. Legal Analysis

(A) Are the Plaintiff's Claims Time-Barred by the Statute of Limitations?

The Court must first address the defendants' assertion that the plaintiff's claims are all time-barred by the applicable statute of limitations. At the outset, and because this matter is before the Court based on diversity jurisdiction pursuant to 28 U.S.C. § 1332 (2000), this Court must address the applicable choice-of-law principles that govern which state's limitations period applies to this case. The District of Columbia Circuit, in Ideal Elec. Sec. Co. v. Int'l Fid. Ins. Co., 129 F.3d 143 (D.C. Cir. 1997), stated that "[w]hen deciding state-law claims under diversity or supplemental jurisdiction, federal courts apply the choice-of-law rules of the jurisdiction in which they sit." Id. at 148 (citing Lee v. Flintkote Co., 593 F.2d 1275, 1278-79 n. 14 (D.C. Cir. 1979)); see Shenandoah Assocs. Ltd. P'ship v. Tirana, 182 F. Supp.2d 14, 18 (D.D.C. 2001) (in a diversity action a court "is obligated under Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938), to apply the choice of law rules prevailing in [the forum] jurisdiction.")). In A.I. Trade Fin., Inc. v. Petra Int'l Banking Corp., 62 F.3d 1454 (D.C. Cir. 1995), the Circuit Court commented that "[l]ooking to the D.C. choice-of-law rules, we see that they treat statutes of limitations as procedural, and therefore almost always mandate application of the District's own statute of limitations." Id. at 1458 (citations omitted). Furthermore, in Steorts v. Am. Airlines, 647 F.2d 194 (D.C. Cir. 1981), the Circuit Court noted that "Erie clearly mandates that in diversity cases the substantive law of the forum controls with respect to those issues which are outcome-determinative, and it is beyond cavil that statute of limitations are of that character." Id. at 196-97 (citations omitted) (emphasis added). Therefore, this Court will apply the District of Columbia's statute of limitations period applicable to the types of claims being pursued by the plaintiff.*fn4

The parties do not dispute that each of the plaintiff's claims is governed by a three-year District of Columbia statute of limitations. This is because her claims are not one of the enumerated causes of action specified in D.C. Code § 12-301 (2001). Section 12-301(8) of the District of Columbia Code provides for a three-year statute of limitations period for those claims "which a limitation is not otherwise specifically prescribed . . ." D.C. Code § 12-301(8). Therefore, because the plaintiff filed her complaint with this Court on September, 26, 2001, each of her claims will be time-barred unless they accrued on or after September 26, 1998. Because this Court finds that each of the plaintiff's claims accrued during the arbitration process, which ended on January 7, 1998, the three-year statute of limitations had already expired when she filed her complaint with this Court.

(1) When did the Plaintiff's Claims Accrue?

District of Columbia law provides that "[g]enerally, a cause of action is said to accrue at the time injury occurs . . . However, in cases where the relationship between the fact of injury and the alleged tortious conduct is obscure when the injury occurs, [the District of Columbia courts] apply a `discovery rule' to determine when the statute of limitations commences." Morton v. Nat'l Med. Enters., Inc., 725 A.2d 462, 468 (D.C. 1999) (citations omitted). Thus, "a cause of action will accrue once a plaintiff has knowledge of `some injury,' its cause in fact, and `some evidence of wrongdoing.'" Id. (citing Colbert v. Georgetown Univ., 641 A.2d 469, 473 (D.C. 1994) (en banc)). The District of Columbia Court of Appeals has explained that

a right of action may accrue before the plaintiff becomes aware of all of the relevant facts. It is not necessary that all or even the greater part of the damages . . . occur before the [right] of action arises. Any appreciable and actual harm flowing from the [defendant's] conduct is sufficient. The law of limitations requires only ...

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