GRAY v. STALEY et al

Filing 51

MEMORANDUM OPINION re: 44 USCA Order remanding the case. See the attached Memorandum Opinion for additional details. Signed by Judge Amit P. Mehta on 12/15/2016. (lcapm1)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
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Plaintiff,
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v.
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HARRY L. STALEY, et al.,
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Defendants.
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_________________________________________ )
LINWOOD GRAY,

Case No. 1:14-cv-00937 (APM)

MEMORANDUM OPINION
Plaintiff Linwood Gray filed this lawsuit in May 2014, seeking to hold Defendants Harry
Staley, Joann Hartley Staley, and Annis Alston Staley liable for a variety of common law tort
claims arising from the alleged misappropriation of assets Plaintiff gave the Defendants and
subsequent fraudulent concealment. The court dismissed Plaintiff’s Complaint with prejudice
after determining all his claims were time barred. See Gray v. Staley, 310 F.R.D. 32 (D.D.C. Aug.
10, 2015).
This case returns to the court on remand from the Court of Appeals. The Court of Appeals
directed this court “to consider whether the statute of limitations applicable to [Plaintiff’s] claims
was tolled under D.C. Code § 12-302(a)(3)” while Plaintiff was incarcerated. Gray v. Staley,
No. 15-7097 (D.C. Cir. Aug. 29, 2016). After thoroughly reviewing the ascertainable facts, the
court concludes that Plaintiff’s claims tolled for a period of time but nonetheless remain time
barred. Accordingly, the court reaffirms its dismissal of Plaintiff’s Complaint with prejudice and
formally denies Plaintiff’s Motion for Reconsideration.

I.

BACKGROUND
The basic facts, as alleged in Plaintiff’s Complaint, are as follows:
[B]eginning in 1977, Plaintiff Linwood Gray and Defendant Harry
Staley discussed possible investment opportunities, including the
option of purchasing McDonald’s franchises. In 1978, the two men
opened an insurance company to generate income to purchase the
franchises. Plaintiff contributed $25,000 toward the company, as
well as a new Cadillac that was intended to be the company car.
In 1982, Gray entered into another arrangement with Harry Staley,
as well as Harry’s then-wife, Defendant Joann Staley. Plaintiff had
his residence transferred into the control of Harry and Joann, who
were to hold the property on Plaintiff’s behalf. Thereafter, without
Plaintiff’s knowledge, Harry and Joann acquired a personal loan
against the property.
Several years later, in 1985, Gray asked Harry and Joann to take out
a loan against his residence to save the property from foreclosure.
Harry and Joann then allegedly lied to Plaintiff, claiming that they
could not find a lender, and failed to inform him that they already
had encumbered the home with a personal loan. In late 1985, the
house was sold at a foreclosure auction. Without Gray’s knowledge,
Harry and Joann received $50,000 from the sale.
Fast-forward 26 years to 2011. In mid-2011, Gray allegedly learned
for the first time that Harry and his new wife, Defendant Annis
Staley, “had secretly opened ‘seven’ McDonald’s franchises, in the
state of New Jersey without apprising Plaintiff of their acquisitions,”
using “Plaintiff’s capital . . . to make the initial franchise
acquisitions.” An email attached to Plaintiff’s complaint shows that
on May 26, 2011, he asked a friend named Johnnie Ervin to “run
down a guy named Harry L. Staley. . . . Could be the owner of a
few McDonalds and possibly live in NJ, [which is] the last address
I had on him.” Five days later, on May 31, 2011, Ervin wrote back
confirming that Staley indeed was the owner of seven McDonald’s
franchises.
....
On May 28, 2014, almost three years to the day after he received the
email from Ervin, Gray filed suit against the Defendants. Asserting
that Defendants’ McDonald’s franchises were financed in part by
profits from his investments and the sale of his house, Plaintiff
brought various claims against Defendants: (1) aiding and abetting;
(2) constructive fraud; (3) civil conspiracy; (4) unjust enrichment;
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(5) breach of fiduciary duty; (6) violation of the Uniform Partnership
Act; (7) false misrepresentation; and (8) fraudulent concealment.
Id. at 34–35 (citations and footnote omitted).
Plaintiff has a long history of criminal activity and convictions. In 1979, while Plaintiff
was serving a sentence for income tax offenses, Plaintiff and Defendant Harry Staley were indicted
on charges of conspiracy to extort and conceal property and concealment of property from the
Internal Revenue Service. See United States v. Gray, 788 F.2d 1031 (4th Cir. 1986). The property
at issue in United States v. Gray is the same house that Plaintiff, in this matter, claims he gave
Harry Staley and which Harry and Joann Staley purportedly misappropriated. See Gray, 310
F.R.D. at 38–39. Plaintiff and Harry Staley were convicted, awarded a new trial on appeal, and
convicted a second time. See United States v. Gray, 852 F.2d 136, 137–38 (4th Cir. 1988).
Plaintiff was sentenced to eight years’ imprisonment. Id. at 138.
Plaintiff was released from prison sometime before December 1992. Although Plaintiff’s
precise date of release is unknown, it is clear he was not incarcerated as of December 1992, when
the Drug Enforcement Agency observed Plaintiff and a cooperating witness exchange heroin and
cash for jewelry Plaintiff believed was stolen. See United States v. Bracey, 104 F.3d 359, 1996
WL 741129, at *2 (4th Cir. 1996) (per curiam). Plaintiff was arrested on June 9, 1994, and
subsequently convicted of conspiracy to distribute heroin and cocaine and distribution of heroin,
for which he was sentenced to 405 months’ imprisonment. See id. at *1; Pl.’s Letter to the Court,
ECF No. 45, at 7.
Plaintiff, proceeding pro se, filed the present civil action in May 2014 while still
incarcerated for his drug conspiracy and distribution convictions. The court dismissed Plaintiff’s
Complaint with prejudice after concluding all his claims were barred by the District of Columbia’s
three-year statute of limitations. See D.C. Code § 12-301(8); Gray, 310 F.R.D. at 37–39. Central
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to the court’s holding was its determination that “Plaintiff’s injury arose, and his causes of action
began to accrue, at the latest, in 1985, when Harry and Joann [Staley] misappropriated the proceeds
of the property sale.” Gray, 310 F.R.D. at 37–38.
Plaintiff subsequently filed a Motion to Alter or Amend Judgment, in which he argued, in
relevant part, that the Mailbox Rule should have been applied to determine the date his Complaint
was filed. See Pl.’s Mot. to Alter or Amend J., ECF Nos. 34 & 35. The court indicated that it
would deny the motion on the ground that, even assuming the Mailbox Rule applied and the
Complaint was filed on May 21 instead of May 28, 2014, dismissal with prejudice was still
warranted. “Plaintiff was on inquiry notice of his claims well before May 21, 2011,” given that
“the Staleys’ ownership of the McDonald’s franchises was not difficult to discover” and “Gray
would have been on inquiry notice of the property’s foreclosure sale in 1985.” See Gray v. Staley
(Gray II), 140 F. Supp. 3d 84, 86–87 (D.D.C. 2015).1
Plaintiff appealed the dismissal of his Complaint. Notice of Appeal, ECF No. 36. On its
own motion, the Court of Appeals remanded the case for this court “to consider whether the statute
of limitations applicable to [Plaintiff’s] claims was tolled under D.C. Code § 12-302(a)(3)” while
Plaintiff was incarcerated. USCA Order, ECF No. 49. The court now turns to that question.
II.

DISCUSSION
Under District of Columbia law, the statute of limitations on an individual’s claim tolls if,

“at the time the right of action accrues, [the plaintiff is] imprisoned.” D.C. Code § 12-302(a)(3).
An action “accrues” within the meaning of Section 12-302 “when the plaintiff suffers an injury.”
District of Columbia v. Tinker, 691 A.2d 57, 64 (D.C. 1997). Thus, if a plaintiff suffers an injury

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Because Plaintiff filed his Notice of Appeal before the court could rule on his Motion to Alter, the court was divested
of jurisdiction and, for that reason, only indicated that it would deny the Motion on remand instead of formally denying
it. See Mem. Op. & Order, ECF No. 43.

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while he is incarcerated, then the statute of limitations on that claim will not begin to run until
Plaintiff is released from prison. Cf. id. Importantly, once the plaintiff is released, the statute
begins to run and “is not tolled again if the inmate is re-arrested.” Id.; accord Patrick v. District
of Columbia, 179 F. Supp. 3d 82, 90 (D.D.C. 2016).
Applying D.C. Code § 12-302(a)(3) to Plaintiff’s history of incarceration, the court
concludes that the limitations period had run by the time Plaintiff filed his Complaint. Previously,
the court held that Plaintiff’s claims accrued sometime in 1985, when Plaintiff’s foreclosed-upon
house was sold at auction and Plaintiff was in the midst of his criminal case with Staley. Gray,
310 F.R.D. at 39. The court applied the discovery rule and found that Plaintiff could “have learned
through the exercise of reasonable diligence what happened to the subject property when the very
same property was at issue in his criminal case.” Gray, 310 F.R.D. at 39; see also Gray II, 140 F.
Supp. 3d at 86–87. In 1985, however, Plaintiff was incarcerated. Thus, under Section 12302(a)(3), the statute of limitations tolled from the time Plaintiff’s claims accrued in 1985 until
Plaintiff’s release from prison. See Tinker, 691 A.2d at 64. The precise date of Plaintiff’s release
is unknown, but he was released sometime prior to December 1992, when he engaged in criminal
conduct that led to his eventual re-arrest and re-incarceration on June 9, 1994. See Bracey, 1996
WL 741129, at *2. That re-arrest did not toll the limitations period for a second time. See Tinker,
691 A.2d at 64. Consequently, because more than three years have elapsed between the early
1990s, when Plaintiff was released from prison and the limitations period began to run, and May
2011, when Plaintiff filed suit, his claims are time barred. See D.C. Code § 12-301(8).
III.

CONCLUSION
In light of the foregoing, the court concludes that the statute of limitations on Plaintiff’s

claims tolled from the time they accrued, in 1985, until Plaintiff’s release from prison, sometime

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prior to December 1992. Given that Plaintiff did not file his Complaint until May 2011, all of
Plaintiff’s claims are barred by the District of Columbia’s three-year statute of limitations.
Accordingly, the court reaffirms its dismissal of Plaintiff’s Complaint with prejudice and formally
denies Plaintiff’s Motion for Reconsideration. A separate Order accompanies this Memorandum
Opinion.

Dated: December 15, 2016

Amit P. Mehta
United States District Court Judge

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