McNamara v. Bre-X Minerals Ltd.
| Citation | 197 F.Supp.2d 622 |
| Decision Date | 30 March 2001 |
| Docket Number | No. 5:97-CV-159.,5:97-CV-159. |
| Parties | Lane MCNAMARA, et al., Plaintiffs, v. BRE-X MINERALS LTD., Bresea Resources, Ltd., John B. Felderhof, Estate of David G. Walsh, T. Stephen McAnulty, John B. Thorpe, Rolando C. Francisco, Hugh C. Lyons, Paul M. Kavanaugh, J.P. Morgan Securities, Inc., P.T. Kilborn Pakar Rekayasa, Kilborn Engineering Pacific, Ltd., SNC-Lavalin, Inc., Nesbit Burns, Inc., Lehman Brothers, Inc., Barrick Gold Corporation, Defendants. |
| Court | U.S. District Court — Eastern District of Texas |
H. Lee Godfrey, Susman Godfrey LLP, Houston, TX, Damon Young, Young Pickett & Lee, Texarkana, TX, A. Paul Miller, Miller James Miller Wyly & Hornsby, Texarkana, TX, R. Paul Yetter, Yetter & Warden, James T. Southwick, Houston, TX, Steven J. Toll, Cohen, Milstein, Housfeld & Toll, Washington, DC, Michael C. Spencer, Hynes & Lerach LLP, New York City, Thomas Robert Ajamie, Schirrmeister Ajamie, Houston, TX, U. Seth Ottensoser, Milberg Weiss Bershad Hynes & Lerach LLP, New York City, Adam R. Gonnelli, Jeffrey G. Smith, Peter W. Smith, Wolfe Haldenstein Adler Freeman & Herz LLP, New York City, Robert C. Schubert, Schubert & Reed LLP, San Francisco, CA, Murray Lewis, Matthew J. Ide, Cohen Milstein Hausfeld & Toll, Seattle, WA, Curt P. Beck, James S. Notis, Abbey Gardy LLP, New York City, Guy A. Wilson, Worhtington & Worthington, Santa Rosa, CA, Charles Robert Eskridge, III, Susman Godfrey LLP, Houston, TX, Edward Miller, Keeney Anderson Miller James & Miller, Texarkana, TX, for Plaintiffs.
John Anderson Gilliam, T. Richard Handler, Jenkens & Gilchrist, Dallas, TX, Andrius R. Kontrimas, Jenkens & Gilchrist, Houston, TX, John Robert Mercy, Mercy Carter & Elliot, Texarkana, TX, Karen Patton Seymour, Tiffany M. Erwin, D. Stuart Meiklejohn, Sharon Nelles, Sullivan & Cromwell, New York City, Preston Worley McGee, Flowers Davis LLP, Tyler, TX Gary D. Grimes, David Gibson Paul, Grimes & Craytor, Texarkana, TX, Johnny Paul Arnold, Texarkana, TX, David E. McCraw, Clifford Chance Rogers & Wells, New York City, David J. Beck, Beck Redden & Secrest LLP, Houston, TX, Paul E. Summit, Sullivan & Worcester, Boston, MA, Andrew T. Solomon, Sullivan & Worcester, New York City, Winford L. Dunn, Jr., Dunn Nutter Morgan & Shaw, Texarkana, AR, L. Nicole Batey, Eric J.R. Nichols, Beck Redden & Secrest LLP, Houston, TX, John Hess McElhaney, Locke Liddell & Sapp, Dallas, TX, John David Crisp, Crisp Boyd Poff, Texarkana, TX, Mark Douglas Wegener, Martin Cunniff, Howrey Simon Arnold & White LLP, Washington, DC, William S. Hommel, Jr., McGee Hommel & Starr PC, Tyler, TX, Zack A. Clement, Linda L. Addison, William J. Boyce, Fulbright & Jaworski, Houston, TX, Preston Worley McGee, McGee Hommel & Starr PC, Tyler, TX, Nicholas H. Patton, Patton Tidwell Sandefur, Texarkana, TX, Robert M. Buschmann, Gerald D. Silver, Winston & Strawn, New York City, Daniel R. Murdock, Winston & Strawn, New York City, Philip Smith, Winston & Strawn, New York City, David Massengill, Simpson, Thacher & Bartlett, New York City, J. Hoke Peacock, II, Orgain Bell & Tucker, Beaumont, TX, Bruce Domenick Angiolillo, Simon A. Steel, Michael A. Berg, Simpson Thacher & Bartlett, New York City, James N. Haltom, Patton Haltom Roberts, McWilliams & Geer LLP, Texarkansas, TX, Eric F. Grossman, Lewis B. Kaden, Lawrence J. Portnoy, Abraham Gesser, Daniel E. Wenner, Helen Harris, Davis Polk & Wardwell, New York City, for Defendants.
Aundrea Kristine/Fiede Gulley, Gibbs & Bruns, Houston, TX, for Movant.
This is a securities fraud case. Seeking class certification, the named Plaintiffs are persons who purchased common stock of Bre-X Minerals Ltd. ("Bre-X") and/or Bresea Resources Ltd. ("Bresea") between January 17, 1994 and May 2, 1997 alleging that Bre-X publicly and fraudulently announced increasingly large gold resource estimates—from less than three million ounces in 1994 to 200 million ounces in February 1997 — for its Busang properties in Indonesia. As these estimates increased, Bre-X's stock price rose from C$2.85 in early 1995 to C$224.75 in early 1996. Plaintiffs allege that over the class period, Bre-X "salted" its core samples and that these resource estimates were based on tests of these samples.
In addition to Bre-X, Bresea, and eight officers and directors of these companies, Plaintiffs name several institutional defendants: (1) P.T. Kilborn Pakar Rekayasa, Kilborn Engineering Pacific, Ltd., and SNC-Lavalin, Inc. ("Kilborn Defendants"), engineering companies that Plaintiffs allege performed resource estimates, mine pre-feasibility studies, and other services for Bre-X and issued false and misleading reports regarding Bre-X's gold reserves; (2) J.P. Morgan Securities, Inc. ("J.P.Morgan"), an American investment bank hired by Bre-X in September 1996 as a financial advisor to aid in negotiating with potential joint venture partners to develop a mine at Busang; (3) Barrick Gold Corporation ("Barrick"), a Canadian mining company that Plaintiffs allege disseminated false and misleading statements in the course of its joint venture negotiations with Bre-X; (4) Nesbit Burns, Inc. ("Nesbitt"), a Canadian investment bank and broker-dealer that Plaintiffs allege issued false and misleading securities research reports regarding Bre-X's gold reserves; and (5) Lehman Brothers, Inc. ("Lehman"), an American investment bank and broker-dealer that Plaintiffs allege issued false and misleading securities research reports regarding Bre-X's gold reserves.
The Court granted previous motions by these institutional Defendants to dismiss the Plaintiffs' Second Amended Complaint as to them on July 13, 1999. (Dkt. No. 370.) See McNamara v. Bre-X Minerals Ltd., 57 F.Supp.2d 396 (E.D.Tex.1999). The Plaintiffs then filed a Third Amended Complaint on August 19, 1999. (Dkt. No. 374.) On February 18, 2000, Plaintiffs requested leave to file a supplement to this third complaint. The Court granted Plaintiffs leave, but ordered that any additions be incorporated within a fourth amended complaint instead of merely a supplement. Plaintiffs filed their Fourth Amended Class Action Complaint on June 14, 2000. (Dkt. No. 437.)1 The following motions to dismiss this 189-page Fourth Amended Class Action Complaint under Federal Rules of Civil Procedure 12(b)(6) and 9(b) are pending:
• P.T. Kilborn Pakar Rekayasa ("P.T.Kilborn") (Dkt. No. 446);
• Kilborn Engineering Pacific Ltd. ("Kilborn Engineering") (Dkt. No. 444); and
• SNC-Lavalin, Inc. ("SNC-Lavalin") (Dkt. No. 442);
• J.P. Morgan (Dkt. No. 448);
• Barrick (Dkt. No. 441);
• Nesbitt (Dkt. No. 450).
• Lehman (Dkt. No. 451);
These Defendants move to dismiss both the federal securities claims and the state common law claims. After reviewing these motions, Plaintiffs' responses, and any replies, the Court finds that the state laws claims should be dismissed with prejudice because after four attempts, the Plaintiffs have failed to plead actual reliance, which is an element of their state law claims. As for the Plaintiffs' claims under the federal securities laws, the Court finds that Lehman's and SNC-Lavalin's motions should be granted and all others denied.
In deciding a motion to dismiss for failure to state a claim, the Court must look only to facts stated in the complaint and in documents attached to or incorporated in the complaint. Lovelace v. Software Spectrum, Inc., 78 F.3d 1015, 1017 (5th Cir. 1996). For purposes of deciding the instant motions, the Court will accept as true the well-pleaded factual allegations in the Complaint and any reasonable inferences which can be drawn from them. See Tuchman v. DSC Comm., 14 F.3d 1061, 1067 (5th Cir.1994). The Plaintiffs, however, "must plead specific facts, not merely conclusory allegations...." Id. The...
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