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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 10, 2005 Decided December 30, 2005
No. 03-7024
THERESA B. BRADLEY
APPELLANT
v.
NATIONAL ASSOCIATION OF SECURITIES DEALERS DISPUTE
RESOLUTION, INC., ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 01cv02047)
Theresa B. Bradley, pro se, argued the cause and filed the
briefs for appellant.
Christopher J. Carney, appointed by the court, argued the
cause as amicus curiae in support of appellant. With him on the
briefs was Warren A. Fitch.
Douglas R. Cox argued the cause for appellees. With him
2
on the brief were Jeffrey A. Wadsworth and Terri L. Reicher. F.
Joseph Warin, Michael J. Edney, and William M. Jay entered
appearances.
Before: SENTELLE, RANDOLPH and ROGERS, Circuit Judges.
Opinion for the Court filed by Circuit Judge ROGERS.
ROGERS, Circuit Judge: Theresa Bradley pro se appeals the
district court’s dismissal under Fed. R. Civ. P. 12(b)(6) of her
complaint against the National Association of Securities Dealers
Dispute Resolution, Inc. (“NASD”) as time-barred under the
three-year statute of limitations of D.C. Code § 12-301(8).
Bradley sued NASD, which administers a dispute resolution
program for the National Association of Securities Dealers, after
an arbitration panel in Florida had dismissed her arbitral
complaint against her stock brokerage company with prejudice.
Aided by amicus on appeal, Bradley contends that Wagner v.
Sellinger, 847 A.2d 1151 (D.C. 2004), which was decided after
the district court dismissed her complaint, demonstrates that the
three-year statute of limitations did not begin to run until
February 24, 1999, when she first learned the reason her arbitral
complaint was dismissed. We conclude that Wagner did not
change District of Columbia law on inquiry notice, and therefore
we affirm.
I.
According to the complaint, Bradley opened an investment
account with Dean Witter Reynolds, Inc. (“Dean Witter”) on
February 26, 1992. The account consisted of her thirty years of
professional earnings and life savings and was her sole source
of income. Over the next eight months, until the account was
closed on October 16, 1992, Dean Witter made unauthorized and
unsuitable investments on her behalf, destroying her entire
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$750,000 stock and bond portfolio.
On October 24, 1994, Bradley initiated arbitration
proceedings against Dean Witter, alleging violations of the
Securities Exchange Act and internal compliance standards,
churning, fraud, and misrepresentation. She selected NASD as
the sponsoring organization for the arbitration after receiving
assurances that NASD conducted its proceedings pursuant to the
Uniform Code of Arbitration and that the hearings would take
place in Atlanta, Georgia where Bradley lived. After Bradley
paid the $300 filing fee and $700 deposit fee for the final
hearing in Atlanta, she and Dean Witter entered into pretrial
discovery. She submitted 3,000 pages of documents,
comprising eight years of financial records from her bank and
investment accounts, as well as personal tax returns for the same
period (1985-1992). Dean Witter had requested all of her
financial records through the time of the arbitration hearing.
However, the chairman of the arbitration panel ruled on July 25,
1995 that no documents dated beyond November 30, 1992 need
be produced by either party. Dean Witter did not file any
objections to this ruling within the allotted time and hence all
discovery requests and pretrial matters were complete. The
arbitration panel scheduled a final hearing for November 1995
in Atlanta.
Dean Witter twice requested and was granted postponement
of the final hearing. Then, on January 6, 1996, over Bradley’s
objections, Dean Witter was granted a change of venue from
Atlanta to Fort Lauderdale, Florida. With the change in venue,
a new panel of arbitrators was selected. For the next two years,
Dean Witter filed exactly the same pretrial discovery requests
that had been ruled on by the Atlanta arbitration panel, including
requests for documents that had already been produced. NASD
forwarded Dean Witter’s discovery requests to the new
arbitrators in Florida without informing them of the prior ruling
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of the Atlanta panel cutting off further discovery. NASD also
denied Bradley access to her case file in Fort Lauderdale in June
1997.
On January 7, 1998, the new arbitration panel dismissed
Bradley’s complaint. She challenged the dismissal in a Florida
state court, which remanded the case for the panel to explain the
basis of its dismissal. On February 24, 1999, the panel amended
its order of dismissal to cite the correct rule, namely Rule 10305
of the NSAD Code of Arbitration Procedure, which authorizes
dismissal for failure to comply with orders of the panel, here for
additional discovery sought by Dean Witter. Having produced
thousands of pages of documents, spent over $30,000 over the
course of five years in attempting to obtain a fair hearing as part
of what she had contemplated would be a quick, efficient, and
inexpensive arbitration, Bradley sued NASD and certain of its
employees in the federal district court on September 26, 2001.
She sought compensatory damages on account of alleged
professional negligence, fraud, abuse of process, and intentional
infliction of emotional distress. NASD moved to dismiss the
complaint under Fed. R. Civ. P. 12(b)(2) & (6). The district
court dismissed the complaint on the ground that Bradley’s
claims were time barred under D.C. Code § 12-301(8), see
Bradley v. Nat’l Ass’n of Sec. Dealers Dispute Resolution, Inc.,
245 F. Supp. 2d 17, 19 (D.D.C. 2003), and she appeals.
II.
Because Bradley filed her complaint on September 26,
2001, her claims are time barred under D.C. Code § 12-301(8)
unless they accrued on or after September 26, 1998. Bradley
does not challenge the district court’s choice of law ruling in
determining that D.C. Code § 12-301(8) applies. She also
acknowledges that the statute of limitations began to run when
she was injured and was at least on inquiry notice as to the
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cause. This only happened, she contends, when the Florida
arbitration panel, upon remand from the state court, amended its
order on February 24, 1999 to indicate that the dismissal of her
arbitral complaint was premised on her purported failure to
comply with discovery orders. In view of the fact that she was
proceeding pro se before the Florida arbitration panel and was
denied access to her case file, and in view of the state court’s
inability to understand the basis of the panel’s dismissal order of
January 7, 1998, Bradley maintains that NASD has not shown
that she was on inquiry notice prior to February 24, 1999 when
she became aware of the causal link between NASD’s
mishandling of the arbitration and the dismissal of her
complaint. Our review of the dismissal of her complaint under
Rule 12(b)(6) is de novo. See Cicippio-Puleo v. Islamic
Republic of Iran, 353 F.3d 1024, 1031-32 (D.C. Cir. 2004);
Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C.
Cir. 2000).
The District of Columbia applies a discovery rule to
determine when the statute of limitations begins to run where the
relationship between the injury and the alleged tortious conduct
is obscure. See Morton v. Nat’l Med. Enters., Inc., 725 A.2d
462, 468 (D.C. 1999). Under the discovery rule, a claim does
not accrue until a plaintiff knows, or by the exercise of
reasonable diligence should know, of (1) an injury, (2) its cause,
and (3) some evidence of wrongdoing. See Bussineau v.
President and Dirs. of Georgetown Coll., 518 A.2d 423, 435
(D.C. 1986). A plaintiff is on such “inquiry notice” of
wrongdoing when “the plaintiff has reason to suspect that the
defendant did some wrong, even if the full extent of the
wrongdoing is not yet known.” Wagner v. Sellinger, 847 A.2d
1151, 1154 (D.C. 2004); Morton 725 A.2d at 468-69.
The face of the complaint makes clear that each of the
alleged injuries by NASD and its employees occurred prior to
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the January 7, 1998 dismissal of Bradley’s arbitral complaint
with prejudice and that Bradley was aware of these injuries as
they occurred. Bradley alleges that NASD injured her by virtue
of its improper change of venue on January 6, 1996; its
excessive delay of the arbitration and improper grant of Dean
Witter’s pre-arbitral discovery requests from January 6, 1996 to
January 7, 1998; and its improper denial of her right to review
her case records in June 1997. Accordingly, under the discovery
rule, Bradley was on inquiry notice of all of the alleged wrongs
no later than January 7, 1998, when her arbitral complaint was
dismissed. This is more than three years before she filed her
complaint in the present suit. Her claims are barred under the
discovery rule.
The District of Columbia has adopted an exception to the
discovery rule in legal malpractice suits – the continuous
representation rule. Under this rule, “when the injury to the
client may have occurred during the period the attorney was
retained, the malpractice cause of action does not accrue until
the attorney’s representation concerning the particular matter in
issue is terminated.” R.H.D. Communications, Ltd. v. Winston,
700 A.2d 766, 768 (D.C. 1997) (quoting Weisberg v. Williams,
Connolly & Califano, 390 A.2d 992, 995 (D.C. 1977)). Thus,
even if, according to the discovery rule, a plaintiff was on
inquiry notice of an attorney’s malpractice more than three years
prior to filing suit, the statute of limitations will not begin to run
until the attorney’s representation is terminated.
The analogy between legal malpractice claims and arbitral
malpractice claims is tenuous and therefore it is not obvious that
District of Columbia courts would borrow the continuous
representation rule from legal malpractice cases and apply it to
arbitral malpractice suits. The court in Winston explained that
“the [continuous representation] rule is based on respect for the
attorney/client relationship and the desire, if the client so
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chooses, to avoid unnecessarily disrupting the representation in
which the error occurred.” Id. at 768. Indeed, under the rule
“[t]he attorney has the opportunity to remedy, avoid or establish
that there was no error or attempt to mitigate the damages.” Id.
There is no relationship of trust and confidence between
arbitrators and the complainant comparable to that between an
attorney and the client or a doctor and the patient. Cf. Anderson
v. George, 717 A.2d 876, 878 (D.C. 1998).
On the other hand, one reason the District of Columbia
adopted the continuous representation rule is the consequences
clients would face without it. The Winston court explained:
[I]f we rejected the continuous representation rule, we
would force the client into one of two scenarios. If the
client chooses to retain the attorney, he risks the
possibility that during such representation the statute of
limitations would expire (because the client
“discovered” the alleged negligence and three years
passed) and thus he risks foregoing redress of his legal
rights. If the client chooses not to stay with his
original attorney he must sue that attorney for
malpractice . . . thus causing a major disruption to the
underlying case. . . .
Id. at 773. These same consequences are likely in arbitral
malpractice claims without the continuous representation rule.
Forcing an injured party in an arbitration proceeding to mount
a challenge to the arbitrators who are deciding the injured
party’s case would force a similar disruption to the proceedings
and eliminate the possibility that mid-course errors could be
corrected or would prove harmless once the arbitration was
completed. However, were Bradley’s claims held to have
accrued before the arbitration panel dismissed her complaint
with prejudice, then she would be between the scylla and
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charybdis of either suing her arbitrators while the arbitration
proceeding was ongoing or forfeiting any claims against them.
For these reasons we will assume that the continuous
representation rule applies to arbitral malpractice suits.
In Winston, as a result of an attorney’s alleged malpractice,
the Federal Communications Commission denied the plaintiff’s
application to build a new radio station. 700 A.2d at 767. But
the plaintiff retained the attorney to seek reconsideration before
the agency and to appeal to this court. Id. In the malpractice
suit against the attorney, the District of Columbia Court of
Appeals adopted the continuous representation rule and held that
despite the plaintiff’s inquiry notice, the statute of limitations
was “tolled until the attorney cease[d] to represent the client in
the specific matter at hand.” Id. at 768. The analogue to arbitral
malpractice claims is that the limitation period is tolled until the
arbitrators cease to service the parties in the specific dispute
between them. The court in Winston also set an outer bound on
the duration of the “specific dispute”– it does not include
appeals. Id. at 770-71; see also Knight v. Furlow, 553 A.2d
1232, 1235 (D.C. 1989). It follows that the continuous
representation rule tolls the running of the statute of limitations
on Bradley’s claims only until the January 7, 1998 dismissal of
her arbitral complaint with prejudice. Bradley’s claims are time
barred even under the continuous representation rule.
Amicus points to the recent decision of the D.C. Court of
Appeals in Wagner to support Bradley’s position that January 7,
1998 is not the appropriate accrual date for Bradley’s claims. In
Wagner, the plaintiffs sued their former attorney for legal
malpractice arising out of a medical malpractice case in which
the attorney represented the plaintiffs until being fired in the
middle of the case. 847 A.2d at 1153-54. The court held that
the limitations period under D.C. Code § 12-301(8) did not
begin to run until the jury had returned an adverse verdict
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because “a statute of limitations cannot begin to run until the
first day on which discovery will show that the plaintiff had a
bona fide lawsuit based on injury, meaning a legally cognizable
claim that would survive a motion to dismiss. Absent injury,
there is no lawsuit.” Id. at 1155. The court reasoned that until
the underlying case giving rise to a lawsuit for legal malpractice
“is resolved (either by verdict or ruling in court or by
settlement), the injury remains uncertain or inchoate” and,
therefore, the statute of limitations does not begin to run. Id. at
1156. Prior to resolution of the underlying lawsuit, the court
explained, the plaintiffs “still had hope, however faint, that
matters could be turned around . . . .” Id. So, Amicus
maintains, Wagner shows that Bradley did not suffer any
redressable injury until the Florida arbitration panel’s dismissal
with prejudice on February 24, 1999, as Bradley was not
previously on inquiry notice because the panel had cited the
wrong rule as the basis for its January 7, 1998 dismissal.
There is no indication in District of Columbia law that
inquiry notice requires knowledge of the nature of one’s injury.
In Wagner, the court reaffirmed that a “plaintiff need not be
fully informed about the injury for the statute [of limitations] to
begin running; she need only have some knowledge of some
injury.” Wagner, 847 A.2d at 1154, citing Colbert v.
Georgetown Univ., 641 A.2d 469, 473 (D.C. 1994) (en banc);
see also Knight v. Furlow, 553 A.2d 1232, 1235 (D.C. 1989).
Just as the Wagner plaintiffs were on inquiry notice of a claim
for legal malpractice once the jury returned its verdict even
though the plaintiffs did not know the precise basis for the
verdict, Bradley was on inquiry notice of her claims for arbitral
malpractice no later than January 7, 1998, when her complaint
was dismissed with prejudice even though she did not know
why. Bradley’s lack of knowledge of the precise basis for the
dismissal does not toll the running of the statute of limitations.
Under District of Columbia law, the panel’s subsequent
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clarification on February 24, 1999 of the basis for its dismissal
is a circumstance of no relevance.
To the extent that Bradley maintains that her injuries, like
those of the plaintiffs in Wagner, were “inchoate” until the
February 24, 1999 dismissal of her arbitral complaint with
prejudice, she would stretch the continuous representation
exception beyond its limits. Amicus suggests that because the
panel did not cite the correct rule for its dismissal of Bradley’s
arbitral complaint until February 24, 1999, the arbitration was
“still being administered.” Amicus Reply Br. at 10. This
approach will not work here. First, the District of Columbia
does not recognize the exhaustion of appeals rule, under which
a “cause of action accrues when the case has come to the end of
the appellate process.” Winston, 700 A.2d at 771; see also
Furlow, 553 A.2d at 1234-36 & n.2. By parity of reasoning, any
lingering hope that the state court might vacate the January 7,
1998 dismissal or that a remand might cause the panel to
reinstate her arbitral complaint is irrelevant for purposes of
determining whether Bradley was on inquiry notice on January
7, 1998. Second, Bradley filed a lawsuit in Florida state court
premised on the dismissal of her arbitral complaint on January
7, 1998, eliminating any doubt that as of that date she was on
inquiry notice of her injuries as a result of the actions by NASD
and its employees that are alleged in her complaint.
Accordingly, because Bradley’s claims are time barred
under D.C. Code § 12-301(8), we have no occasion to address
whether NASD and its employees have immunity from suit, and
we affirm the judgment dismissing the complaint.