Adams County, Board of County Commissioners v. Asay et al

Filing 98

ORDER denying 52 Motion to Dismiss and 79 Motion for Joinder by Judge Philip A. Brimmer on 8/30/12.(dkals, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 11-cv-02238-PAB-KLM
THE BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF ADAMS,
Plaintiff,
v.
LELAND ASAY, et al.,
Defendants.

ORDER

This matter is before the Court on the motion to dismiss pursuant to Fed. R. Civ.
P. 12(b)(6) [Docket No. 52] filed by defendant Leland Asay and the motion to join
defendant Asay’s motion to dismiss [Docket No. 79] filed by defendant Jerry Lee Rhea.
The motions are ripe for disposition.
When resolving a motion to dismiss pursuant to Rule 12(b)(6), “[t]he court’s
function . . . is not to weigh potential evidence that the parties might present at trial, but
to assess whether the plaintiff’s Complaint alone is legally sufficient to state a claim for
which relief may be granted.” Dubbs v. Head Start, Inc., 336 F.3d 1194, 1201 (10th Cir.
2003) (citations omitted). In doing so, the Court “must accept all the well-pleaded
allegations of the complaint as true and must construe them in the light most favorable
to the plaintiff.” Alvarado v. KOB-TV, L.L.C., 493 F.3d 1210, 1215 (10th Cir. 2007)
(quotation marks and citation omitted). At the same time, however, a court need not
accept conclusory allegations. Moffett v. Halliburton Energy Servs., Inc., 291 F.3d

1227, 1232 (10th Cir. 2002).
Asay was the Director of Public Works for Adams County at all relevant times.
Plaintiff’s complaint alleges that Asay and others within the Public Works Department
conspired with individuals, including Rhea, who was working for Quality Paving
Company and Quality Resurfacing Company (collectively, “Quality Paving”), to defraud
plaintiff in relation to road construction and resurfacing projects. Plaintiff alleges that
defendants “developed and executed an extensive scheme of misbilling, overbilling,
and fabricating completed work, daily run sheets, daily logs, invoices, contracts, and
contract change orders submitted by the Quality companies for County road paving and
resurfacing contracts which were then knowingly approved for payment by the corrupt
co-conspirators within the Public Works department.” Docket No. 1 at 5, ¶ 1. Plaintiff
identifies 52 acts that it alleges constitute fraudulent misbilling, overbilling, and
fabrication amounting to $9,000,000 in losses to plaintiff. See Docket No. 1 at 19-38
¶¶ 43 - 68, 67-68 ¶ 123.
Defendants Asay and Rhea (collectively, “defendants”) request that the Court
dismiss the claims against them pursuant to Fed. R. Civ. P. 12(b)(6) for failure to
comply with the applicable statutes of limitations, arguing that plaintiff was aware of
allegations of kickbacks and no-bid contracts as early as the spring of 2008. Plaintiff
responds that its claims are not based on these earlier allegations of misconduct, but
rather on the 52 acts identified in the complaint about which it contends it did not learn
until the summer of 2010.
Plaintiff brings numerous claims against defendants, alleging that they violated
the Racketeer Influenced Corrupt Organizations Act (“RICO”), see 18 U.S.C. § 1962(c),
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and the Colorado Organized Crime Control Act (“COCCA”), see Colo. Rev. Stat. § 1817-104(3), and that they conspired in violation of both RICO, see 18 U.S.C. § 1962(d),
and COCCA, see Colo. Rev. Stat. § 18-17-104(4). Plaintiff also asserts claims of actual
fraud, aiding and abetting fraud, fraudulent concealment, breach of contract, and civil
conspiracy against the defendants. In addition, plaintiff asserts claims of constructive
fraud and breach of fiduciary duty against Asay, and a claim for aiding and abetting a
breach of fiduciary duty against Rhea. The parties agree that, in regard to these
causes of action, the shortest applicable statute of limitations is two years.
A statute of limitations argument constitutes an affirmative defense. However,
“Rule 12(b)(6) is a proper vehicle for dismissing a complaint that, on its face, indicates
the existence of an affirmative defense such as noncompliance with the limitations
period.” Bullington v. United Air Lines Co., 186 F.3d 1301, 1310 n.3 (10th Cir. 1999)
(citation omitted), implicitly overruled on other grounds as recognized by Boyer v.
Cordant Technologies, 316 F.3d 1137, 1140 (10th Cir. 2003). “[W]hen the dates given
in the complaint make clear that the right sued upon has been extinguished, the plaintiff
has the burden of establishing a factual basis for tolling the statute.” Aldrich v.
McCulloch Props., Inc., 627 F.2d 1036, 1041 n.4 (10th Cir. 1980); see Tello v. Dean
Witter Reynolds, Inc., 410 F.3d 1275, 1288 n.13 (11th Cir. 2005) (“At the
motion-to-dismiss stage, a complaint may be dismissed on the basis of a
statute-of-limitations defense only if it appears beyond a doubt that Plaintiffs can prove
no set of facts that toll the statute.”) (internal quotation marks and citations omitted).
In arguing that plaintiff’s claims should be dismissed as untimely, defendants rely

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exclusively on plaintiff’s allegations that it was aware as early as the spring of 2008 of
kickbacks received by Asay and no-bid contracts entered into by defendants in relation
to paving projects. Plaintiff, however, disavows any desire to support its claims with this
conduct.
While plaintiff may not be seeking relief based upon this particular conduct, that
does not ineluctably mean that such conduct is irrelevant to determining when plaintiff
knew or should have known of its alleged injuries, which were occurring during the
same time period as the alleged kickbacks and no-bid contracts.1 With that said,
defendants’ reading of the complaint is wholly limited to the kickback and no-bid
contract issues. They fail to address or acknowledge the manner in which plaintiff
actually pled its claims. While it is not clear whether, upon completion of discovery,
plaintiff’s claims will survive a challenge regarding all of the applicable statutes of
limitations, the complaint clearly focuses on acts other than those upon which
defendants’ assertion of the affirmative defense is based. The Court further notes that
defendants did not file replies to plaintiff’s response briefs and, therefore, have not
refuted plaintiff’s characterization of its own claims. In light of the foregoing, defendants
have not demonstrated that, from a review of the complaint, it is “clear that the right[s]
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While the Supreme Court “has not settled upon a definitive rule for when the
limitations clock starts running, it has announced two possibilities: either when the
plaintiff knew or should have known of his injury (the injury-discovery rule); or when the
plaintiff was injured, whether he was aware of the injury or not (the injury-occurrence
rule)” Cory v. Aztec Steel Bldg., Inc., 468 F.3d 1226, 1234 (10th Cir. 2006). However,
“[i]n either case the plaintiff need not be aware of the pattern of racketeering activity.”
Dummar v. Lummis, 543 F.3d 614, 621 (10th Cir. 2008) (citing Rotella v. Wood, 528
U.S. 549, 555 (2000), for the proposition that, “even if a discovery accrual rule applies,
‘discovery of the injury, not discovery of the other elements of a claim, is what starts the
clock’”).
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sued upon ha[ve] been extinguished.” Aldrich, 627 F.2d at 1041 n.4. Consequently, it
is
ORDERED that the motions to dismiss [Docket Nos. 52, 79] filed by defendants
Leland Asay and Jerry Lee Rhea are DENIED.

DATED August 30, 2012.
BY THE COURT:

s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge

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