Nat'l Credit Union Admin. Bd. v. Ciuni & Panichi, Inc.
| Decision Date | 11 January 2019 |
| Docket Number | CASE NO. 5:16-cv-455 |
| Parties | NATIONAL CREDIT UNION ADMINISTRATION BOARD, acting in its capacity as Liquidating Agent for G.I.C. Federal Credit Union, PLAINTIFF, v. CIUNI & PANICHI, INC. CERTIFIED PUBLIC ACCOUNTANTS, et al., DEFENDANTS. |
| Court | U.S. District Court — Northern District of Ohio |
MEMORANDUM OPINION AND ORDER
Before the Court are the following motions for summary judgment:
For the reasons set forth herein, the NCUA Board's motion for partial summary judgment with respect to the Ciuni defendants' statute of limitations defense (Doc. No. 196) is denied and the Ciuni defendants' motion for partial summary judgment that all claims based on the 2006 and 2007 audits are time-barred (Doc. No. 205) is granted; the NCUA Board's motion for partial summary judgment on the pleadings or, in the alternative, for partial summary judgment as to defendants' affirmative defenses (Doc. No. 197) is granted in part and denied in part; the NCUA Board's motion for partial summary judgment concerning defendants' liability as the 2007 Audit (Doc. No. 198) is denied; and Smolko's motion for summary judgment (Doc. No. 206) is granted.2
On February 26, 2016, acting in its capacity as Liquidating Agent for G.I.C. Federal Credit Union ("GIC"), the NCUA Board filed a complaint against the Ciuni defendants,3 seeking to recover damages relating to a massive, multiyear fraud committed by William Memmer ("Memmer")4, a long-time officer and employee of GIC who overstated GIC's assets by over $9 million resulting in a loss to the National Credit Union Share Insurance Fund ("NCUSIF") of more than $8 million. The NCUA Board seeks to hold the Ciuni defendants responsible because they were GIC's outside independent auditors and, in that capacity, failed to discover the nonexistenceof millions of dollars in GIC assets reported on published financial statements for the years 2006, 2007, and 2008.5 The NCUA Board alleges that, but for the Ciuni defendants' misfeasance, Memmer's fraud would have been discovered years earlier and the loss to GIC would have been either avoided or significantly reduced.6
When a party files a motion for summary judgment, it must be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "A party asserting that a fact cannot be or is genuinely disputed must support the assertion by: (A) citing to particular parts of materials in the record ...; or (B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed. R. Civ. P. 56(c)(1).
In reviewing summary judgment motions, this Court must view the evidence in a light most favorable to the nonmoving party to determine whether a genuine issue of material fact exists.Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598, 26 L. Ed. 2d 142 (1970); White v. Turfway Park Racing Ass'n, Inc., 909 F.2d 941, 943-44 (6th Cir. 1990), impliedly overruled on other grounds by Salve Regina Coll. v. Russell, 499 U.S. 225, 111 S. Ct. 1217, 113 L. Ed. 2d 190 (1991). A fact is "material" only if its resolution will affect the outcome of the lawsuit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). Determination of whether a factual issue is "genuine" requires consideration of the applicable evidentiary standards. Thus, in most civil cases the Court must decide "whether reasonable jurors could find by a preponderance of the evidence that the [nonmoving party] is entitled to a verdict[.]" Id. at 252.
"Once the moving party has presented evidence sufficient to support a motion for summary judgment, the nonmoving party is not entitled to trial merely on the basis of allegations; significant probative evidence must be presented to support the complaint." Goins v. Clorox Co., 926 F.2d 559, 561 (6th Cir. 1991). The party opposing the motion for summary judgment may not rely solely on the pleadings but must present evidence supporting the claims asserted by the party. Banks v. Wolfe Cty. Bd. of Educ., 330 F.3d 888, 892 (6th Cir. 2003); see Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986) (). Moreover, conclusory allegations, speculation, and unsubstantiated assertions are not evidence, and are not sufficient to defeat a well-supported motion for summary judgment. See Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888, 110 S. Ct. 3177, 111 L. Ed. 2d 695 (1990). In other words, to defeat summary judgment, the party opposing the motion must present affirmative evidence to support his or her position; a mere "scintilla of evidence" is insufficient. Bell v. Ohio State Univ.,351 F.3d 240, 247 (6th Cir. 2003). Rule 56 further provides that "[t]he court need consider only" the materials cited in the parties' briefs. Fed. R. Civ. P. 56(c)(3); see also Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479-80 (6th Cir. 1989) .
Under this standard, the mere existence of some factual dispute will not frustrate an otherwise proper summary judgment motion. Dunigan v. Noble, 390 F.3d 486, 491 (6th Cir. 2004) (quotation marks omitted) (citing Anderson, 477 U.S. at 247-48). Anderson, 477 U.S. at 248.
In their motion for partial summary judgment, the Ciuni defendants argue that all claims based upon the 2006 and 2007 audits are time-barred, and were already time-barred at the time GIC was placed into liquidation, warranting summary judgment in their favor on those claims. (Doc. No. 205 at 5397.) They assert that these claims accrued when the audit reports were issued. They further assert that all of the claims related to these two audit years are governed by the same four-year statute of limitations because, under Ohio law, the breach of contract claims (whichordinarily have a six-year statute of limitations) are subsumed into the professional negligence claims. (Id. at 5404-05 (citing cases).)
The NCUA Board takes the position in its motion that an accounting malpractice claim accrues when the negligent act is discovered. (Doc. No. 196 at 1822.) It further argues that there are several theories under Ohio law (e.g., the delayed damages rule, the termination rule, the continuing tort doctrine, and general equitable tolling principles) that, under the "unique circumstances" of this case, would permit the tolling of the statute of limitations for the tort claims for audit years 2006 and 2007. (Doc. No. 196 at 1822 (citing Antioch Co. Litig. Tr. v. Morgan (In re Antioch Co.), No. 3:10-CV-156, 2011 WL 3664564 (S.D. Ohio Aug. 12, 2011)).) In opposition to the Ciuni defendants' motion, the NCUA Board also argues that the breach of contract claims are not subsumed into the professional negligence claims because any such Ohio law conflicts with, and is preempted by, the Extender Statute, 12 U.S.C. § 1787(b)(14). (Doc. No. 227 at 7312-15.)
There are several issues raised by these competing summary judgment motions. The Court will address them in this order: (a) whether the breach of contract claims are subsumed into the professional negligence claims; (b) when the claims accrued; (c) whether the Extender Statute affects the date of accrual; and (d) whether there is any equitable theory upon which the statute of limitations should be tolled.
The Ciuni defendants first argue that all the claims in the Board's complaint are governed by the four-year statute of limitations for professional negligence, that is, that the breach of contract claims are subsumed into the professional negligence claims.
In its complaint, the NCUA Board alleges, in relevant part:
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