Butler v. Deutsche Morgan Grenfell, Inc., 25,556.

• Decision Date: 25 April 2006
• Docket Number: No. 25,557.,No. 25,558.,No. 25,556.,25,556.,25,557.,25,558.
• Citation: 2006 NMCA 084,140 P.3d 532
• Parties: W. Jack BUTLER, Third-Party Plaintiff/Cross-Claimant-Appellant, v. DEUTSCHE MORGAN GRENFELL, INC., Defendant-Appellee, and DEUTSCHE BANK, AG, Suncor Energy Inc., Syncrude Canada Ltd., and Exxon-Mobil Corporation, Third-Party Defendants-Appellees.
• Court: Court of Appeals of New Mexico

140 P.3d 532

2006 NMCA 084

W. Jack BUTLER, Third-Party Plaintiff/Cross-Claimant-Appellant, v. DEUTSCHE MORGAN GRENFELL, INC., Defendant-Appellee, and DEUTSCHE BANK, AG, Suncor Energy Inc., Syncrude Canada Ltd., and Exxon-Mobil Corporation, Third-Party Defendants-Appellees.

No. 25,556.

No. 25,557.

No. 25,558.

Court of Appeals of New Mexico.

April 25, 2006.

Certiorari Denied, No. 29,851, July 27, 2006.

COPYRIGHT MATERIAL OMITTED

Victor R. Marshall, Diane P. Donaghy, Victor R. Marshall & Associates, P.C., Albuquerque, NM, for Appellant.

John R. Cooney, Charles A. Armgardt, Modrall, Sperling, Roehl, Harris & Sisk, P.A., Albuquerque, NM, Jeffrey Barist, Milbank, Tweed, Hadley, & McCloy LLP, New York, NY, Michael D. Nolan, Andrew M. Leblanc, Milbank, Tweed, Hadley, & McCloy LLP, Washington, DC, for Appellees. Deutsche Bank, AG and Deutsche Morgan Grenfell, Inc.

William L. Lutz, David P. Lutz, Martin, Lutz, Roggow, Hosford & Eubanks, P.C., Las Cruces, NM, for Appellees Suncor Energy Inc. and Syncrude Canada Ltd.

Robin A. Goble, Gary L. Gordon, Miller Stratvert P.A., Albuquerque, NM, for Appellee Exxon-Mobil Corporation.

OPINION

PICKARD, Judge.

{1} In this case, we examine the pleading requirements for asserting the discovery rule in response to a motion to dismiss on the ground that a claim is time barred. We hold that a plaintiff must respond to such a motion with general factual allegations that, if proved, would successfully defeat the statute of limitations defense. We also examine whether a stay entered in this case tolled the statutes of limitations and whether the appellant is entitled to invoke the equitable tolling rule applicable to class action plaintiffs. Because neither of these latter theories tolled the statutes of limitations, and because the appellant failed to adequately plead the discovery rule, we affirm the district court's grant of all Defendants' motions to dismiss.

BACKGROUND

{2} This case originated as a class action lawsuit, brought by shareholders of the Solv-Ex Corporation against the corporation, John Rendall (the founder and CEO of Solv-Ex), Appellant W. Jack Butler (Solv-Ex's president), and Deutsche Morgan Grenfell (DMG, a company that had helped to finance the corporation). Solv-Ex had plans to build plants to extract oil from tar sands in northern Canada. Solv-Ex claimed that it was developing new technology that would add billions of barrels of recoverable oil to the world reserves and would allow extraction in a manner more environmentally sound than traditional methods. In the mid-1990s, Solv-Ex stock plummeted, and in 1997, the company declared bankruptcy.

{3} The class plaintiffs filed a complaint in 1996 and an amended complaint in 1997. Plaintiffs alleged fraud, misrepresentation, breach of fiduciary duty, and violations of state securities laws. In 2002, Rendall (a defendant in the class action and nonparty in this case) filed an answer to the class action complaint. Rendall included in his answer purported cross-claims, counterclaims, or third-party claims against DMG, as well as other entities who had not previously been party to the litigation. Those entities included Deutsche Bank (the parent corporation of DMG) and several oil companies, including Third-Party Defendants in this appeal, Exxon Mobil, Syncrude, and Suncor. (The Third-Party Defendants as well as DMG will hereinafter be referred to as Defendants.) Rendall claimed that the oil companies had conspired with the Deutsche Bank Defendants to destroy Solv-Ex.

{4} In 2003, Butler (a defendant in the class action and the appellant in this case) filed an answer with claims similar to Rendall's against Deutsche Bank, DMG, Exxon Mobil, Syncrude, and Suncor. Butler claimed that the technology being developed by Solv-Ex presented a threat to the oil companies, who had conspired with the Bank to pull financing from Solv-Ex, causing the company to fail.

{5} Butler's pleading asserted five causes of action: (1) market manipulation, (2) antitrust violations, (3) prima facie tort, (4) defamation, and (5) malicious abuse of process. The district court dismissed all of Butler's claims against all parties to this appeal. The court ruled that all of Butler's claims were time barred. The court also ruled that, as to some of the claims, Butler was not the real party in interest and had failed to state claims upon which relief could be granted. Finally, the court ruled that it lacked personal jurisdiction over Deutsche Bank, and it dismissed the Bank, Exxon, and Suncor and Syncrude as misjoined parties. Butler appeals all of these orders. Because we hold that all of Butler's claims are time barred, we do not address the other grounds on which the district court ruled.

STANDARD OF REVIEW

{6} We review a district court's grant of a motion to dismiss de novo, accepting as true all of the appellant's well-pleaded allegations. See Healthsource, Inc. v. X-Ray Assocs. of N.M., P.C., 2005-NMCA-097, ¶ 16, 138 N.M. 70, 116 P.3d 861 ("For purposes of a motion to dismiss, we accept all well-pleaded facts as true and question whether the plaintiff might prevail under any state of facts provable under the claim.").

DISCUSSION

{7} Butler argues that his claims were not time barred for three reasons: (1) the district court stayed the proceedings, thereby tolling the statutes of limitations; (2) the statutes were equitably tolled under the rule that mandates such tolling for putative class action plaintiffs during the period when a class is awaiting a certification decision; and (3) all the statutes are subject to the discovery rule, and Butler could not have discovered his claims until 2002, less than a year before he asserted them.

{8} There has been some confusion over which statutes of limitations are applicable to Butler's claims. However, Butler does not argue that any of his claims are subject to a limitations period of more than four years. Thus, because Butler's pleading asserting those claims was filed on February 11, 2003, they are all barred if they accrued before February 11, 1999.

{9} Butler appears to make some assertion that the events underlying his claims occurred more recently, making his claims facially timely. However, as noted above, all of his substantive arguments involve reasons why he should be permitted to assert his claims even if they are facially time barred. Moreover, his claims all center around acts purportedly taken with the purpose of destroying Solv-Ex. Because Solv-Ex was effectively destroyed when it filed for bankruptcy in 1997, we agree with Defendants that the alleged acts underlying the claims must have occurred prior to that time. Even Butler, citing an Albuquerque Journal article, states that it is "undisputed" that the alleged market manipulation occurred in 1996. Thus, because the longest limitations period at issue here is four years, all of Butler's claims are facially time barred, and Butler may continue to assert them only if the statutes were tolled or he can invoke the discovery rule. We now turn to Butler's three arguments, rejecting them all.

1. The Stay Entered in 1997 Did Not Toll the Statutes

{10} Butler first argues that an order entered early in the case "stayed the proceedings," thereby tolling the applicable statutes of limitations. That order, entered on January 30, 1997, states in full as follows:

THE parties have agreed to an extension of time for Defendants Solv-Ex Corporation, John Rendall, and W. Jack Butler and Defendant Deutsche Morgan Grenfell, Inc., to respond to Plaintiffs' Memorandum of Points and Authorities in Support of Class Certification and to respond and/or make objections to Plaintiffs' First Request for Production and Inspection of Documents to and including 30 days following entry of orders on Motions to Dismiss or Stay to be filed by Defendants, and the Court being fully advised in the premises,

IT IS ORDERED that Defendants Solv-Ex Corporation, John Rendall, and W. Jack Butler, and Defendant Deutsche Morgan Grenfell, Inc., shall have an extension of time to respond to Plaintiffs' Memorandum of Points and Authorities in Support of Class Certification and to respond and/or make objections to Plaintiffs' First Request for Production and Inspection of Documents to and including 30 days after entry of orders denying the Motion to Dismiss and Motion to Stay to be filed by Defendants Solv-Ex Corporation, John Rendall, and W. Jack Butler, and Defendant Deutsche Morgan Grenfell, Inc.

The typed title of the order is "AGREED ORDER." However, after that title, the district judge added by hand the phrase "STAYING PROCEEDINGS," and she initialed this change.

{11} Butler argues that this order tolled the statutes of limitations because the change in the title of the order transformed it into a complete stay of the proceedings. Butler states,

The parties had agreed to language in the order that stayed the proceedings until certain motions were completely briefed and the related orders were entered. However, when the Agreed Order was submitted to the court for approval, Judge Conway expanded the impact of the order by hand-writing on it that it "stayed the proceedings."

Butler argues that this stay has never been dissolved and that it prevented him from filing his claims. We disagree for two reasons.

{12} First, substance trumps form when interpreting court orders. See Martinez v. Friede, 2004-NMSC-006, ¶ 27, 135 N.M. 171, 86 P.3d 596 ("[I]t is of little or no consequence that the district court did not explicitly rely on Rule 1-060(B) [NMRA] in its order granting a new trial. The substance of the order controls, not its title or form."). The clear goal of this order was to provide an "extension of time." The order anticipated that the original defendants, including Butler, would file motions to dismiss and motions to stay, and it provided extra time so that they could do so without missing what would ordinarily have been the deadline for responding...