Rowe v. Marietta Corp., 92-2963-D.

• Citation: 955 F.Supp. 836
• Decision Date: 29 January 1997
• Docket Number: No. 92-2963-D.,92-2963-D.
• Parties: Donald M. ROWE, J. Rowe, Masella B. Rowe, and California Soap Co., Inc., Plaintiffs, v. MARIETTA CORPORATION and John Nadolski, Defendants.
• Court: U.S. District Court — Western District of Tennessee

Page 836

955 F.Supp. 836

Donald M. ROWE, J. Rowe, Masella B. Rowe, and California Soap Co., Inc., Plaintiffs, v. MARIETTA CORPORATION and John Nadolski, Defendants.

No. 92-2963-D.

United States District Court, W.D. Tennessee, Western Division.

January 29, 1997.

Alan E. Glenn, John McQuiston, II, Evans & Petree, Memphis, TN, for Donald M. Rowe.

Jim N. Raines, Glanker Brown Gilliland Chase Robinson & Raines, Memphis, TN, Benjamin E. Rosenberg, Shereff Friedman Hoffman & Goodman, New York City, for Marietta Corporation.

Abigail Pessen, Scoppetta & Seief, New York City, for John S. Nadolski.

ORDER DENYING DEFENDANT MARIETTA CORPORATION'S MOTION IN LIMINE ON DAMAGES AND GRANTING DEFENDANT MARIETTA CORPORATION'S MOTION FOR JUDGMENT ON THE PLEADINGS

DONALD, District Judge.

Before the court are (1) the motion in limine of defendant Marietta Corporation (Marietta) to dismiss Counts I, V, and VI of the Second Amended Complaint (SAC) as time-barred and to preclude the plaintiffs (collectively, Rowe) from claiming any damages from alleged shortfalls in earn out calculations for fiscal years 1989, 1991 and 1992,¹ and (2) the motion of Marietta for judgment on the pleadings on Count IX of the SAC, pursuant to Federal Rule of Civil Procedure 12(c).

DISPOSITION OF MOTION IN LIMINE AS CONVERTED MOTION FOR SUMMARY JUDGMENT

While Marietta styled this proceeding as a motion in limine, the Court notes that, in substance, this motion seeks the dismissal of three counts of Rowe's securities law claims on limitations grounds and preclusion of Rowe's breach of contract claim as time-barred pursuant to the express terms of the contract.

The function of a statute of limitations is to bar stale claims. Black Law Enforcement Officers v. City of Akron, 824 F.2d 475, 482-83 (6th Cir.1987) (citing American Pipe & Constr. v. Utah, 414 U.S. 538, 554, 94 S.Ct. 756, 766, 38 L.Ed.2d 713 (1974)). A statute of limitations is neither a rule of evidence nor bearing on the admissibility of evidence. Black Law Enforcement Officers, 824 F.2d at 483 (quoting United States v. Ashdown, 509 F.2d 793, 798 (5th Cir.), cert. denied, 423 U.S. 829, 96 S.Ct. 48, 46 L.Ed.2d 47 (1975)).

A defense predicated on a statute of limitations is an affirmative defense. FED.R.CIV.P. 8(c). The Court construes Marietta's assertion of a contractual limitations or estoppel argument, vis-à-vis Rowe's breach of contract claim, as volenti non fit injuria, a defense not listed in FED.R.CIV.P. 8(c), but viewed as an affirmative defense nonetheless. 5 CHARLES A. WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1271, note 27 (2d ed.1990).

Generally, an affirmative defense must be raised for the first time in the defendant's answer, or may be brought by motion prior to filing an answer. FED.R.CIV.P. 8(c), 12(b)(6). Failure to raise an affirmative defense in accordance with the Federal Rules of Civil Procedure may constitute waiver of that defense. See Colonial Refrigerated Transport, Inc. v. Worsham, 705 F.2d 821 (6th Cir.1983); FED.R.CIV.P. 8(c), 12(b)(6). An affirmative defense which has not been waived may also be raised after the close of pleadings in a motion for judgment on the pleadings. FED.R.CIV.P. 12(c). In Paragraph 172 of its Answer to the SAC, Marietta asserts, as to Counts I, V & VI of the SAC, the affirmative defense of limitations. Marietta posits its affirmative contractual defense to Rowe's breach-of-merger contract claim (Count XI) at Paragraphs 192 and 193 of its Answer to the SAC.

Accordingly, the Court elects to treat this motion in limine as a motion to dismiss pursuant to FED.R.CIV.P. 12(c). Cf. General Elec. Co. v. Sargent & Lundy, 916 F.2d 1119 (6th Cir.1990) (motion in limine based on statute of limitations construed by court as motion for judgment on the pleadings). Marietta supports its motion in limine with deposition testimony and other evidence outside of the pleadings. Rowe's response in opposition also relies on matters outside of the pleadings. Because Marietta and Rowe both rely on matters outside the pleadings, and because the Court finds that neither party will be surprised or prejudiced by conversion, see Dayco Corp. v. Goodyear Tire & Rubber Co., 523 F.2d 389 (6th Cir.1975), the Court, guided by FED.R.CIV.P. 12(c), elects to convert the instant motion to a motion for summary judgment.

Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c). The party moving for summary judgment "bears the burden of clearly and convincingly establishing the nonexistence of any genuine issue of material fact, and the evidence as well as all inferences therefrom must be read in a light most favorable to the party opposing the motion." Kochins v. Linden-Alimak, Inc., 799 F.2d 1128, 1133 (6th Cir.1986). The burden on the party moving for summary judgment may be discharged by pointing out that there is an absence of evidence to support the nonmoving party's case. Kauffman v. Allied Signal, Inc., Autolite Div., 970 F.2d 178, 182 (6th Cir.), cert. denied, 506 U.S. 1041, 113 S.Ct. 831, 121 L.Ed.2d 701 (1992) (the moving party need not support its motion with affidavits or other similar materials "negating" the opponent's claim) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986)). The Court may also consider any material that would be admissible or usable at trial including exhibits that have been properly made a part of an affidavit. 10A CHARLES A. WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE § 2721, at 40, § 2722, at 56 (2d ed.1983).

When confronted with a properly supported motion for summary judgment, the nonmoving party must set forth specific facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). A genuine issue for trial exists if the evidence is such that a reasonable trier of fact could return a verdict for the nonmoving party. Id. The party opposing the motion must "do more than simply show that there is some meta-physical doubt as to the material facts." Matsushita Electrical Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). In short, the nonmoving party may not oppose a properly supported motion for summary judgment by mere reliance on the pleadings. Celotex, 477 U.S. at 324, 106 S.Ct. at 2553. "[I]n the `new era' of summary judgments that has evolved from the teachings of the Supreme Court in Anderson, Celotex and Matsushita, trial courts have been afforded considerably more discretion in evaluating the weight of the nonmoving party's evidence." Cox v. Kentucky Dep't of Transp., 53 F.3d 146, 150 (6th Cir.1995). "If the record taken in its entirety could not convince a rational trier of fact to return a verdict in favor of the nonmoving party, the motion must be granted." Id.

Marietta asserts the affirmative defense of limitations, based on the Supreme Court's holding in Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350, 111 S.Ct. 2773, 115 L.Ed.2d 321 (1991). In Lampf, the Supreme Court held that the applicable limitations and repose periods for private rights of action under 15 U.S.C. § 78j(b) (Section 10(b) of the Securities Exchange Act of 1934) and 17 C.F.R. 240.10b-5 (Rule 10b-5) were one and three years, respectively. Lampf, 501 U.S. at 362-364, 111 S.Ct. at 2782.

Although the subject of considerable disagreement among commentators and courts,² see, e.g., Lewis D. Lowenfels and Alan R. Bromberg, SEC Rule 10b-5 and Its New Statute of Limitations: The Circuits Defy the Supreme Court, 51 BUS.LAW. 309 (1996), the one-year limitation period in Lampf is read in this circuit to run "from the time the fraud was discovered or should have been discovered." Ockerman v. May Zima & Co., 27 F.3d 1151, 1155 (6th Cir.1994). Other circuits have issued similar interpretations of Lampf's dispositive issue — i.e., that the limitations period for § 10(b) actions operates from an inquiry notice standard, as opposed to an actual notice standard. See, e.g., Dodds v. Cigna Sec., Inc., 12 F.3d 346 (2nd Cir. 1993), cert. denied, 511 U.S. 1019, 114 S.Ct. 1401, 128 L.Ed.2d 74 (1994); Chance v. F.N. Wolf & Co., Inc., No. 93-2390, 1994 WL 529901 (4th Cir. Sept. 30, 1994); Topalian v. Ehrman, 954 F.2d 1125 (5th Cir.), cert. denied, 506 U.S. 825, 113 S.Ct. 82, 121 L.Ed.2d 46 (1992); LaSalle v. Medco Research, Inc., 54 F.3d 443 (7th Cir.1995); Anixter v. Home-Stake Prod. Co., 939 F.2d 1420, reh'g granted in part, 947 F.2d 897 (10th Cir.1991), vacated on other grounds sub nom. Dennler v. Trippet, 503 U.S. 978, 112 S.Ct. 1658, 118 L.Ed.2d 382 (1992). Because the Court of Appeals for the Sixth Circuit has clearly interpreted Lampf to impose a one-year, inquiry notice limitations period on private plaintiffs bringing § 10(b) actions, Ockerman, supra, this Court must apply the same one-year, inquiry notice limitations period to Rowe's § 10(b) claim sub judice. The court will apply the one-year, inquiry notice statute of limitations from § 18(c) of the 1934 Act³ to Count V of the SAC, brought under § 18(a) of the 1934 Act.⁴ See In re General Dev. Corp. Bond Litig., 800 F.Supp. 1128 (S.D.N.Y.1992), aff'd sub nom Menowitz v. Brown, 991 F.2d 36 (2nd Cir.1993). With respect to Count VI of the SAC (15 U.S.C. 78t), it does not have an integrated limitations period, and the Court is directed by Lampf to look to the most closely analogous federal statute — in this case § 15 of the 1933 Act, 15 U.S.C. § 78t. Section 15 does not have its own limitations period either, but it relates directly to §§ 11 and 12 of the 1933 Act, which are expressly controlled by the one-year, inquiry notice st...