Des Brisay v. Goldfield Corp., 78-3221
| Decision Date | 23 January 1981 |
| Docket Number | No. 78-3221,78-3221 |
| Citation | 637 F.2d 680 |
| Parties | Fed. Sec. L. Rep. P 97,844 Richard J. DES BRISAY, representatively and derivatively, on behalf of himself, Etc., et al., Plaintiffs-Appellants, v. The GOLDFIELD CORPORATION and Goldfield Lumber Enterprises, Ltd., Defendants-Appellees. and Harold Sigurdson, as Liquidator for C.P.H.C. Holding Company, Ltd., and C.P.H.C. Holding Company, Ltd., Defendants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Michael S. Hayes, Jennings P. Felix, Seattle, Wash., for plaintiffs-appellants.
William A. Gould, Seattle, Wash., argued, M. Margaret McKeown, Seattle, Wash., on brief, for defendants-appellees.
Appeal from the United States District Court for the Western District of Washington.
Before SNEED and ANDERSON, Circuit Judges, and EAST, * District Judge.
Des Brisay, on behalf of shareholders in an alleged federal securities fraud and pendent breach of contract action, appeals the District Court's dismissal of the action, with prejudice, as time barred. We note jurisdiction and affirm.
In 1969, Canadian Plywood Corporation, Ltd. (Plywood) was on the verge of bankruptcy. It agreed to be wholly acquired by the Goldfield Corporation (Goldfield) via an exchange of stock. An Exchange Agreement was entered into and several United States and Canadian corporations were created to facilitate the acquisition. The deal closed on November 19, 1969, and an exchange of stock was made through a holding company, with the Goldfield shares going to Western Pacific Trust Company to be distributed or to be sold on the American Stock Exchange, depending on the wishes of the individual Plywood shareholders.
Within the 60 day period following the closing, it became obvious that the sale of Goldfield shares was probably in violation of the United States securities acts and regulations. Further, Goldfield was unable to transfer additional make-up shares to satisfy certain provisions of the Exchange Agreement. The Securities Exchange Commission subsequently obtained an order suspending all trading in Goldfield shares.
This suit was commenced on April 22, 1974 in the Western District of Washington. Washington State has a three year statute of limitations applicable to securities claims, while British Columbia has a six year statute of limitations applicable to this type of claim.
Clause 17 of the Exchange Agreement provides:
"This agreement shall be governed by and interpreted according to the laws of the province of British Columbia."
The District Court earlier denied defendant Goldfield's motion to dismiss the action as time barred under the Washington statute. However, on renewal of the motion and further advice, the District Court on August 30, 1978 granted the motion. The District Court concluded, in brief, that Clause 17 was not controlling as to the statute of limitations question because such was procedural and not substantive. Therefore, Washington State's statute of limitations was applicable. The District Court also found and concluded, under the facts presented, that the defendants were not estopped to raise the limitations defense.
The District Court had earlier dismissed Des Brisay's pendent breach of contract action based upon the law of British Columbia.
We agree with the District Court on all three scores.
Clause 17 of the Exchange Agreement makes no mention of statutes of limitation, but rather is a standard choice of law clause for application to the substantive interpretation of a contract. Such clauses generally do not contemplate application to statutes of limitation. Limitations periods are usually considered to be related to judicial administration and thus governed by the rules of local law, even if the substantive...
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