Berman v. Blount Parrish & Co., Inc., 2:03-cv-1173-MEF.

• Court: United States District Courts. 11th Circuit. Middle District of Alabama
• Writing for the Court: Mark E. Fuller
• Citation: 523 F.Supp.2d 1298
• Decision Date: 26 November 2007
• Docket Number: No. 2:03-cv-1173-MEF.,2:03-cv-1173-MEF.
• Parties: M. Daniel BERMAN, et al., Plaintiffs, v. BLOUNT PARRISH & CO., INC., et al., Defendants.

523 F.Supp.2d 1298 M. Daniel BERMAN, et al., Plaintiffs,
v.
BLOUNT PARRISH & CO., INC., et al., Defendants. No. 2:03-cv-1173-MEF. United States District Court, M.D. Alabama, Northern Division. November 26, 2007.

Earl Price Underwood, Jr., Law Offices of Earl P. Underwood, Fairhope, AL, John Francis Innelli, Law Offices of John F. Innelli, Philadelphia, PA, Michael J. Molder, Law Offices of Michael J. Molder, Wynnewood, PA, Plaintiffs.

Andrew P. Campbell, Brandy Murphy Lee, Campbell Waller & Poer LLC, Birmingham, AL, for Defendants.

MEMORANDUM OPINION AND ORDER

MARK E. FULLER, Chief Judge.

This cause is before the Court on the Defendants' Motion to Dismiss (Doc. # 47),

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filed August 22, 2005 and Defendants' Motion for Sanctions (Doc, # 49), filed August 22, 2005. Plaintiffs M. Daniel Berman and Joseph A. Stanley, Jr. (collectively "Plaintiffs") have filed suit against Blount Parrish & Company, Inc., BP Holdings, LLC, and certain individuals (collectively "Defendants") alleging violations of sections 12(a) and 15 of the Securities Act of 1933 ("the Securities Act"), 15 U.S.C. §§ 771, 77o. Because it is apparent from the face of the complaint that Plaintiffs' claims are time-barred, this Court finds that Defendants' Motion to Dismiss is due to be GRANTED. This Court also finds that the Defendants' Motion for Sanctions is due to be DENIED.

I. JURISDICTION AND VENUE

The Court exercises subject matter jurisdiction over Plaintiff's claims pursuant to 15 U.S.C. § 77v(a) (securities) and 28 U.S.C. § 1331 (federal question). The parties contest neither personal jurisdiction nor venue, and the Court finds an adequate factual basis for each.

II. RULE 12(B)(6) STANDARD

A Rule 12(b)(6) motion tests the legal sufficiency of the complaint. Prior to the Supreme Court's recent decision in Bell Atl. Corp. v. Twombly, ___ U.S. ___, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), a motion to dismiss could only be granted if a plaintiff could prove "no set of facts ... which would entitle him to relief." See Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); see also Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984); Wright v. Newsome, 795 F.2d 964, 967 (11th Cir.1986). Now, in order to survive a motion to dismiss for failure to state a claim, the plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." Twombly, 127 S.Ct. at 1974. Plaintiff's "[f]actual allegations must be enough to raise a right to relief above a speculative level on the assumption that the allegations in the complaint are true." Id. at 1965. It is not sufficient that the pleadings merely "le[ave] open the possibility that the plaintiff might later establish some set of undisclosed facts to support recovery." Id. at 1968 (internal quotation and alteration omitted). In considering a defendant's motion to dismiss, a district court will accept as true all well-pleaded factual allegations and view them in a light most favorable to the plaintiff. See Am. United Life Ins. Co. v. Martinez, 480 F.3d 1043, 1057 (11th Cir.2007). Accord Nelson v. Campbell, 541 U.S. 637, 640, 124 S.Ct. 2117, 158 L.Ed.2d 924 (2004) (where a court is considering dismissal of a complaint at the pleading stage, it must assume the allegations of the complaint are true). Furthermore, the threshold is "exceedingly low" for a complaint to survive a motion to dismiss for failure to state a claim. See Ancata v. Prison Health Servs., Inc., 769 F.2d 700, 703 (11th Cir. 1985).

III. FACTS AND PROCEDURAL HISTORY

The facts alleged in the complaint are as follows. The Industrial Development Board of the City of Troy, Alabama ("the City") published a prospectus in the form of an offering memorandum for the sale of Solid Waste Revenue Bonds. The offering included $5,800,000 worth of Series 1998A Bonds, and $1,000,000 worth of Series 1998B Bonds. The bonds were issued to finance the acquisition, construction, and equipping of a poultry recycling, processing and feed manufacturing facility to be located in Troy, Alabama. This facility would be leased by the City to Alabama Protein Recycling, LLC ("APR") pursuant to a Facility Lease Agreement dated May 1, 1998 ("Lease Agreement"). The City's obligation under the bonds was payable

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from the payments APR was to make to the City under the Lease Agreement.

The prospectus explained that APR would provide services to two primary industries: the poultry industry and the livestock feed manufacturing industry. For poultry growers, APR would provide for removal and disposal of deceased poultry for a monthly fee. APR would transport the deceased poultry to a facility where they would be ground, heated, and treated for pathogens. The poultry would then be converted into a high-protein additive for the feed industry or finished feed product for the livestock industry.

Plaintiff Berman alleges that he purchased $30,000 Series 1998B Bonds in May 1998. Plaintiff Stanley alleges that he purchased $35,000 Series 1998B Bonds in May 1998. Plaintiff Berman filed his original complaint in the Northern District of Georgia on March 14, 2003 against Blount Parrish. On August 14, 2003, the complaint was amended to add Plaintiff Stanley, and several defendants as well. The complaint alleges that Defendants made numerous false statements and omissions of material fact in the prospectus in violation of the Securities Act of 1933 §§ 12(a) and 15. The case was transferred to this Court on November 17, 2003.

IV. DISCUSSION

A. Motion to Dismiss

The Defendants argue that the Plaintiffs' complaint should be dismissed because they are barred by the statute of limitations. Dismissal under Rule 12(b)(6) on statute of limitations grounds is appropriate if it is apparent from the face of the complaint that the claim is time-barred. Tello v. Dean Witter Reynolds, Inc., 410 F.3d 1275, 1288 (11th Cir.2005) (Tello I). The defendant has the burden of proof to establish the elements of the affirmative defense of the statute of limitations. Id. at 1292. If Defendants can establish that the Plaintiffs' claims are time-barred, dismissal of this action would be warranted because "a class representative whose claim is time-barred cannot assert the claim on behalf of the class." Tello v. Dean Witter Reynolds, Inc., 494 F.3d 956, 974 n. 17 (11th Cir.2007)...