Appeal from the United States District Court for the District of Columbia (No. 93cv02430)
Before: Buckley, Ginsburg, and Tatel, Circuit Judges.
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Opinion for the Court filed Per Curiam.
Appellants, Myrna O'Dell Firestone, individually and as trustee of the Russell A. Firestone III Child Support Trust, and Russell A. Firestone III seek review of two district court orders. In the first, the district court dismissed Russell III and Myrna's complaint with prejudice, ruling that their claims were barred by the applicable three-year statute of limitations and that their complaint failed to plead fraud with particularity as required by Federal Rule of Civil Procedure 9(b). The second order denied Appellants' Federal Rule of Civil Procedure 59(e) motion to vacate the dismissal of the complaint and Rule 15(a) motion requesting leave to file an Amended Complaint. We reverse the district court's order denying the 59(e) and 15(a) motions, and remand with instructions to grant Appellants leave to file their First Amended Complaint.
The parties in this suit are all members of the same family. Russell A. Firestone III, one of the plaintiffs, is the great-grandson of Harvey S. Firestone, founder of The Firestone Tire & Rubber Company. Myrna O'Dell Firestone, the other plaintiff, is Russell III's mother. Myrna was married to Russell A. Firestone Jr.-Russell III's father-until their divorce in 1974. Defendant, Leonard Firestone, is the oldest living son of Harvey S. Firestone. Leonard also serves as an "advisor" to the Firestone trusts, known as the Harbel Trusts, of which Russell III and other descendants of Harvey Firestone are beneficiaries.
This suit is rooted in intra-family disputes dating back more than two decades. Pursuant to the 1974 divorce, Russell Jr. agreed to pay child support into a trust for Russell III and to pay spousal support to Myrna. When Russell Jr. refused to pay the support owed, Myrna sued for enforcement in Kentucky, obtaining a judgment in 1984. At that time, Russell Jr. was allegedly receiving at least $800,000 a year from the Harbel Trusts, of which Ameritrust Bank served as trustee.
On November 29, 1993, Russell III and Myrna, individually and on behalf of the Russell A. Firestone III Child Support Trust, filed a pro se complaint in the United States District Court for the District of Columbia against Leonard Firestone for fraud, intentional infliction of emotional distress, and interference with judgments. They claimed damages in excess of $13 million. The complaint alleged that a "representative" of Leonard Firestone, in "a series of meetings, telephone calls, letters and proposals" commencing in June 1984, encouraged them to "dismiss the judgments [and] appeals" pending against Russell Jr. and settle other unspecified litigation against Ameritrust, the trustee of the Harbel Trusts. Complaint Para(s) 3. In exchange, Russell III and Myrna received a written agreement providing "payment guarantees for their past-due, court-ordered child support and spousal support." Id. Without explanation, the complaint alleges that Leonard sought the agreement because he would gain "approximately $1 million" in relief from liability in claims filed against him. Id. Para(s) 4. Relying on Leonard's representations, Russell III and Myrna dismissed their appeals and their actions to enforce their judgments, forfeiting more than $5 million. Id. Para(s) 6-7. They allege, however, that Leonard's representations were fraudulent from their inception: the payments stopped in April 1987, forcing them into litigation which was unsuccessful. Id. WW 8-9.
Leonard Firestone moved to dismiss the complaint on several grounds including that Russell III and Myrna's claims were barred by the applicable three-year statute of limitations of the District of Columbia, and that they had failed to plead fraud with particularity as required by Federal Rule of Civil Procedure 9(b). Leonard's statute of limitations argument is based on the complaint's allegations that the payments of child and spousal support stopped in 1987. Def.'s Mot. to Dismiss at 7-8. According to Leonard, the cessation of the payments put Russell III and Myrna on inquiry notice of their claims against Leonard. Because the suit was not filed until six years later, he claims it is barred by the 3-year statute of limitations. Id. at 8-9.
Russell III and Myrna, now represented by counsel, filed an opposition to defendant's motion, arguing that a motion to dismiss was not the proper tool for raising a statute of limitations defense, and that, from the face of the complaint, their allegations were not clearly time-barred. Pls.' Mem. of Law in Opp'n to Def.'s Mot. to Dismiss at 1-9. They also argued that their complaint properly pled fraud as required by Rule 9(b). See id. at 10. Although Russell III and Myrna did not append a proposed amended complaint, they asked the court to grant them leave to amend in the event that the complaint failed to "comply with the federal rules." Id. at 11. On July 13, 1994, the district court dismissed the complaint with prejudice, stating that Russell III and Myrna's claims were time-barred and that they had failed to plead fraud with particularity.
On July 27, 1994, Russell III and Myrna filed a motion to alter or amend the judgment pursuant to Federal Rule of Civil Procedure 59(e) and requested leave pursuant to Rule 15(a) to file an amended complaint, which they appended to the motions. Without giving its reasons, the court denied both motions. On August 26, 1994, Russell III and ...