facts would give rise to the doctrine. It is our view that
these allegations are insufficient to trigger the doctrine of
equitable estoppel. See Moll, 700 F. Supp. at 1289 ("Conclusory
allegations of fraudulent concealment are not sufficient to
withstand a motion to dismiss.").
Moreover, under New York law, the "due diligence on the part
of the plaintiff in bringing his action is an essential
element for the applicability of the doctrine of equitable
estoppel." Simcuski v. Saeli, 44 N.Y.2d 442, 450, 406 N.Y.S.2d
259, 263, 377 N.E.2d 713, 717 (1978). The Simcuski Court
asserted that "the burden is on the plaintiff to establish that
the action was brought within a reasonable time after the facts
giving rise to the estoppel have ceased to be operational." Id.
The length of the statutory period itself, in this case three
years, "sets an outside limit on what will be regarded as due
diligence." Id. at 451, 406 N.Y.S.2d at 263, 377 N.E.2d 717.
In Zola v. Gordon, supra, the district court construed due
diligence as "a reason to suspect the probability of any manner
of wrongdoing." Zola, 685 F. Supp. at 367 (construing "due
diligence" in the context of the equitable tolling doctrine).
In Klein v. Shields & Company, 470 F.2d 1344 (2d Cir. 1972),
the Second Circuit concluded constructive knowledge of
appellant's claims would be imputed to him because the
appellant "with reasonable diligence" could have discovered his
claims by a certain date since "[a]t that point in time, at
least the possibility of fraud should have been apparent. . .
." Id. at 1347 (construing constructive knowledge of fraud);
see also Dayco Corp. v. Goodyear Tire & Rubber Co.,
523 F.2d 389, 394 (6th Cir. 1975) ("Any fact that should excite his
suspicion is the same as actual knowledge of his entire
claim."); but see Armstrong v. McAlpin, 699 F.2d 79, 88 (2d
Cir. 1983) (constructive knowledge of fraud will be imputed
when the circumstances suggest to a person of ordinary
intelligence the "probability" that he has been defrauded and
he fails to fulfill his duty of inquiry).
Nowhere in its amended third-party complaint does AA allege
what inquiry it undertook to investigate the possibility of
bringing claims after its "suspicions" were aroused in July of
1984 and early November of 1985. Thus, even accepting AA's
allegations of fraudulent concealment as alleged in the
third-party complaint and assuming that the doctrine of
equitable estoppel would be applicable to the instant claims,
the negligence claim would still be time-barred as a matter of
law since third-party plaintiffs have failed to also allege
they made any inquiry as to the wrongdoing of the NIDA
Directors after having their "suspicions" aroused after July
of 1984 and early November of 1985. See Moll, 700 F. Supp. at
1293 ("A party seeking to avoid the bar of the statute [of
limitations] must aver and show that he used due diligence to
detect it. . . .") (construing "due diligence" in the context
of equitable tolling and quoting Wood v. Carpenter, 101 U.S.
(11 Otto) 135, 143, 25 L.Ed. 807 (1879)).
We therefore dismiss the fifth claim for relief for
negligence as alleged in the amended third-party
For the reasons articulated above, the motion to dismiss
pursuant to Fed.R.Civ.P. 12(b)(2) and 12(b)(6) of third-party
defendants Alex H. Fetherstone, C. Shaun Harte, Ronald J.
Henderson, Anthony S. Hopkins, and James Sim is granted as to
the second, third, fourth, and fifth causes of action as
alleged in the amended third-party complaint.
The motion to dismiss is granted as to the first cause of
action with respect to the claims for indemnity for violations
of RICO, the federal securities law and fraud claims in the
main action, and the claims for contribution as to the RICO
and federal securities law claims in the main action. The
motion to dismiss the first cause of action is denied with
respect to the third-party plaintiffs' indemnity claim for
in the main action, and with respect to the contribution
claims as to fraud and negligence in the main action.
Finally, we grant the third-party defendants' motion to
dismiss Ronald J. Henderson as a third-party defendant.