Centaur Classic Convertible Arbitrage Fund Ltd. v. Countrywide Fin. Corp.
| Citation | 878 F.Supp.2d 1009 |
| Decision Date | 20 January 2011 |
| Docket Number | Case No. 10–CV–05699 MRP (MANx). |
| Court | U.S. District Court — Central District of California |
| Parties | CENTAUR CLASSIC CONVERTIBLE ARBITRAGE FUND LTD.; Argent Classic Convertible Arbitrage Fund II L.P.; Argent Lowlev Convertible Arbitrage Fund II LLC; Centaur Lowlev Arbitrage Fund Ltd.; Argentum Multi–Strategy Fund Ltd.; Lyxor Argent Low Leverage Fund Limited; HFR CA Global Select Master Trust; Acuity Master Fund, Ltd.; Carlyle Multi–Strategy Master Fund Liquidating Trust; Lyxor Acuity Fund Limited; Polygon Global Opportunities Master Fund; Rhapsody Fund, L.P.; Nuveen Multi–Strategy Income and Growth Fund; Nuveen Multi–Strategy Income and Growth Fund 2; Radcliffe SPC; Tempo Master Fund L.P.; Canyon Capital Arbitrage Master Fund, Ltd.; Adi Convert Absolu; Adi Convex; Adi Convex Absolu; Canyon Value Realization Fund, L.P.; Canyon Value Realization Mac 18, Ltd.; GLG Market Neutral Fund; Lyxor Canyon Capital Arbitrage Fund Limited; Mohican VCA Master Fund, Ltd.; The Canyon Value Realization Fund Cayman, Ltd.; Camulos Master Fund L.P.; Casam Adi CB Arbitrage Limited; Concordia Institutional Multi–Strategies Ltd.; Concordia Mac 29, Ltd.; Concordia Partners L.P.; Delta Institutional, L.P.; Delta Offshore Master, Ltd.; Delta Onshore, L.P.; Delta Pleiades, L.P.; HFR CA Lazard Rathmore Master Trust; Kallista CB Arbitrage Fund Limited; RCG PB, Ltd.; RHP Master Fund, Ltd.; Ramius Convertible Arbitrage Master Fund Ltd.; S.A.C. Arbitrage Fund, LLC; Stark Master Fund Ltd.; Steelhead Pathfinder Master, L.P., Plaintiffs, v. COUNTRYWIDE FINANCIAL CORPORATION; Angelo R. Mozilo; David Sambol; Eric P. Sieracki, Defendants. |
OPINION TEXT STARTS HERE
Andrew J. Entwistle, Arthur V. Nealon, Jonathan H. Beemer, Joshua K. Porter, Robert N. Cappuci, William S. Gyves, Entwistle and Cappucci LLP, New York, NY, Marc M. Seltzer, Susman Godfrey LLP, Los Angeles, CA, for Plaintiffs.
Lloyd Winawer, Goodwin Procter LLP, Los Angeles, CA, Brian Charles Devine, Brian E. Pastuszenski, Jennifer B. Luz, John O. Farley, Goodwin Procter LLP, Boston, MA, David Siegel, Adam J. Fletcher, Craig Varnen, Irell & Manella LLP, Michael C. Tu, Orrick Herrington & Sutcliffe LLP, Nicolas Morgan, DLA Piper LLP, Los Angeles, CA, Michael D. Torpey, Orrick Herrington and Sutcliffe, San Francisco, CA, Paul Francis Rugani, Orrick Herrington & Sutcliffe LLP, Seattle, WA, David A. Priebe, Jeffrey B. Coopersmith, DLA Piper LLP, East Palo Alto, CA, Shirli Fabbri Weiss, DLA Piper LLP, San Diego, CA, for Defendants.
This securities action was brought by eight institutional affiliates of Argent Classic Convertible Arbitrage Fund (the “Argent Classic Fund”), the lead plaintiff in the now dismissed class action Argent Classic Conv. Arb. Fund v. Countrywide Fin. Corp. et al., No. 07–cv–07097–MRP (MANx) ( “Argent” ), and 38 other institutional investors. After the Court's denial of class certification in Argent, the parties stipulated to a dismissal with prejudice of that case on May 4, 2010.1 About three months later, on July 30, 2010, this lawsuit was filed. The 46 institutional plaintiffs here allege that they purchased unregistered, privately-placed Series A and Series B Floating Rate Convertible Senior Debentures Due 2037 (the “Debentures”), issued by Defendant Countrywide Financial Corporation (“Countrywide”), at unidentified times during the six months between the Debentures' initial offering on May 16, 2007 and November 21, 2007, which Plaintiffs define as the relevant period. Compl. (Docket No. 1) at 3:17–21.
Plaintiffs here assert the same six claims regarding the same Debentures that were asserted in Argent.2 The claims are brought against Countrywide and its former senior executive officers and directors (herein referred to as the “Individual Defendants” 3). Under the Securities Exchange Act of 1934 (“Exchange Act”), the first claim is for violation of § 10(b) and Rule 10b–5 (Count I). The second claim is for violation of § 20(a) (Count II) and is brought against the Individual Defendants only. The remaining claims arise under California state law: violation of Sections 25400(d), 25500, and 25504.1 of the California Corporations Code (Counts III and IV) brought against Countrywide only; common law fraud and deceit (Count V); and common law negligent misrepresentation (Count VI). Plaintiffs claim any applicable statutes of limitation with respect to their claims were tolled no later than October 30, 2007, by the filing of the class action complaint in Argent, pursuant to the doctrine announced in American Pipe & Construction Co. v. Utah, 414 U.S. 538, 552, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974). Compl. ¶ 704.
Countrywide has filed a motion to dismiss on the basis of the statutes of limitation and failure to satisfy the heightened pleading requirements of Federal Rule of Civil Procedure 9(b) and the Private Securities Litigation Reform Act, 15 U.S.C. § 78j. The Individual Defendants joined in the motion, and Defendant Sambol filed an additional motion which addresses Plaintiffs' failure to adequately plead scienter with respect to him. The Court notes that Countrywide's motion identifies a host of deficiencies in the Complaint, but in the interests of efficiency, the Court singles out only a few as a basis of this ruling.
The Court GRANTS Countrywide's motion to dismiss in its entirety. First, the Court holds the state law claims are barred by their respective statutes of limitation and DISMISSES them WITH PREJUDICE. Second, the Court DISMISSES the federal securities claims WITHOUT PREJUDICE because the Complaint fails to specify the material facts as to each Plaintiff's claim, including the dates and the amounts of Plaintiffs' alleged securities purchases or the statements upon which Plaintiffs allegedly relied in entering into these transactions. Third, there are no allegations as to sales or dispositions of the securities as there must be to support any allegation of loss. Finally, with respect to Defendant Sambol, because the Court grants Countrywide's motion to dismiss, the Court DENIES AS MOOT Sambol's separate motion to dismiss without prejudice to Sambol's renewing his motion after Plaintiffs have repleaded.
A motion to dismiss tests whether the allegations in a complaint, if true, amount to an actionable claim. Navarro v. Block, 250 F.3d 729, 732 (9th Cir.2001). Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it fails to state a claim upon which relief can be granted. To survive a motion to dismiss, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). This “facial plausibility” standard requires the plaintiff to allege facts that add up to “more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). In deciding whether the plaintiff has stated a claim, the Court must assume the plaintiff's allegations are true and draw all reasonable inferences in the plaintiff's favor. Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir.1987). However, the Court is not required to accept as true “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir.2008).
Defendants argue that Plaintiffs' state law claims must be dismissed because they are barred by their respective statutes of limitation. “A motion to dismiss based on the running of the statute of limitations period may be granted only ‘if the assertions of the complaint, read with the required liberality, would not permit the plaintiff to prove the statute was tolled.’ ” Supermail Cargo, Inc. v. United States, 68 F.3d 1204, 1206–07 (9th Cir.1995) (quoting Jablon v. Dean Witter & Co., 614 F.2d 677, 682 (9th Cir.1980)). The untimeliness must appear beyond doubt on the face of the complaint before a claim will be dismissed as time-barred. See id.
The Complaint asserts that the statutes of limitation on all of the claims are tolled by American Pipe & Construction Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974). Compl. ¶ 704. Defendants concede that the doctrine of American Pipe applies to toll the federal claims but dispute its application to the state law claims. In their brief and at oral argument, Plaintiffs contend the state law claims are tolled also by California's equitable tolling doctrine and by this Court's exercise of supplemental jurisdiction in Argent, under 28 U.S.C. § 1367(d). Plaintiffs do not argue that their claims are timely in the absence of tolling, and Defendants do not argue that the claims are untimely despite tolling. Thus, the timeliness of the state law claims depends entirely on whether the statutes of limitation were suspended during the pendency of Argent. They were not.
There is no dispute that the federal claims in this action were tolled during the pendency of Argent under the doctrine of American Pipe. In American Pipe, the United States Supreme Court held that the commencement of a putative class action “tolls the running of the statute for all purported members of the class who make timely motions to intervene after the court has found the suit inappropriate for class action status.” 414 U.S. at 553, 94 S.Ct. 756. In Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 103 S.Ct. 2392, 76 L.Ed.2d 628 (1983), the Court extended American Pipe to allow tolling not only where plaintiffs sought to intervene in a continuing action, but also where they sought to file an entirely new action. Id. at 353–54, 103 S.Ct. 2392. The rule of American Pipe operates to toll the statute of...
To continue reading
Request your trial
-
Vincent v. Money Store
...situations where a class action is filed outside the California state court system....” Centaur Classic Convertible Arbitrage Fund Ltd. v. Countrywide Fin. Corp., 878 F.Supp.2d 1009, 1017 (C.D.Cal.2011). This includes cases where both the initial class action and subsequent suit were filed ......
-
Gianelli v. Schoenfeld, 2:21-cv-00477-JAM-KJN PS
...claims are governed by California's statutes of limitations. Centaur Classic Convertible Arbitrage Fund Ltd. v. Countrywide Fin. Corp., 878 F.Supp.2d 1009, 1015 (C.D. Cal. 2011). [26] It is not at all clear whether Emergency Rule 9 applies to federal claims. See Simon Streets, 2021 WL 41469......
-
Sec. Action, 08 Ci v. 2793. SRM Global Master Fund Ltd. (In re Bear Stearns Cos.)
...the timeliness of state law claims originally filed outside that state's courts. See Centaur Classical Convertible Arbitrage Fund Ltd. v. Countrywide Fin. Corp., 878 F.Supp.2d 1009, 1017 (C.D.Cal.2011) (holding that cross-jurisdictional tolling applies even where the class action and subseq......
-
In re Libor-Based Fin. Instruments Antitrust Litig., 11 MDL 2262 (NRB)
...a subsequent district court case from the same circuit, Centaur Classic Convertible Arbitrage Fund Ltd. v. Countrywide Fin. Corp., 878 F. Supp. 2d 1009, 1017 (C.D. Cal. 2011)), Vincent concluded that California's class-action tolling was not cross-jurisdictional. The court next declined to ......