Stitt v. Williams
| Court | United States Courts of Appeals. United States Court of Appeals (9th Circuit) |
| Citation | 919 F.2d 516 |
| Docket Number | 88-1646 and 88-1732,Nos. 87-2090,s. 87-2090 |
| Parties | Fed. Sec. L. Rep. P 95,647, 18 Fed.R.Serv.3d 1320, RICO Bus.Disp.Guide 7631 Ann Marie STITT, Carol E. Williams, Jon A. Williams, Gloria May Heckman, Mark A. Williams, Carol D. Williams, James R. Stitt, Plaintiffs-Appellants, and Norma Jean Hutcherson, Plaintiff, v. Dale A. WILLIAMS, Agean, Ltd., a California Limited Partnership; Creekside, Ltd., a California Limited Partnership; The 49-010-19, a California Limited Partnership; Norwood, Ltd., a California Limited Partnership, and Does 1 through 300; Leasco Investments, Inc.; Leasco Realty Company, Inc.; Bay Blue Vistas, Ltd.; Delta Park, Ltd.; Delta, Ltd.; Gunnar I, Ltd.; Sandalwood, Ltd.; Colony Cove IV, Ltd.; Colony Cove V, Ltd.; Ontario Mobile, Ltd.; Ponderosa Pines, Ltd.; Seton Mobile Home Park, Ltd.; Rory I, Ltd.; Ninth Street Condominium, Ltd.; Villa Del Arroyo, Ltd.; Victoria, Ltd., and Does 1 through 1000, inclusive, Defendants-Appellees. Ann Marie STITT; Carol E. Williams; Jon A. Williams; Gloria May Heckman; Mark A. Williams; Carol D. Williams-Vyfvinkel; James R. Stitt, Plaintiffs-Appellants, and Lewis & Company, Lawyers: L. Burke Lewis, Amy J. Cassedy, and Arthur L. Martin, Claimant-Appellant, v. Dale A. WILLIAMS; Agean, Ltd., a California Limited Partnership; Creekside, Ltd., a California Limited Partnership; The 49-010-19, a California Limited Partnership; Norwood, Ltd., also known as Southwind, a California Limited Partnership and Does 1 through 300; Leasco Investments, Inc.; Leasco Realty Company, Inc.; Bay Blue Vistas, Ltd.; Delta Park, Ltd.; Delta, Ltd.; Gunnar I, Ltd.; Sandalwood, Ltd.; Colony Cove IV, Ltd.; Colony Cove V, Ltd.; Ontario Mobile, Ltd.; Ponderosa Pines, Ltd.; Seton Mobile Home Park, Ltd.; Rory I, Ltd.; Ninth Street Condominium, Ltd.; Villa Del Arroyo, Ltd.; Victoria, Ltd., and Does 1 through 1000, inclusive, Defendants-Appellees. Ann Marie STITT; Carol E. Williams; Jon A. Williams; Gloria May Heckman; Mark A. Williams; Carol D. Williams; James R. Stitt, Plaintiffs-Appellees, and Lewis |
| Decision Date | 15 November 1990 |
Page 516
RICO Bus.Disp.Guide 7631
May Heckman, Mark A. Williams, Carol D. Williams,
James R. Stitt, Plaintiffs-Appellants,
and
Norma Jean Hutcherson, Plaintiff,
v.
Dale A. WILLIAMS, Agean, Ltd., a California Limited
Partnership; Creekside, Ltd., a California Limited
Partnership; The 49-010-19, a California Limited
Partnership; Norwood, Ltd., a California Limited
Partnership, and Does 1 through 300; Leasco Investments,
Inc.; Leasco Realty Company, Inc.; Bay Blue Vistas, Ltd.;
Delta Park, Ltd.; Delta, Ltd.; Gunnar I, Ltd.;
Sandalwood, Ltd.; Colony Cove IV, Ltd.; Colony Cove V,
Ltd.; Ontario Mobile, Ltd.; Ponderosa Pines, Ltd.; Seton
Mobile Home Park, Ltd.; Rory I, Ltd.; Ninth Street
Condominium, Ltd.; Villa Del Arroyo, Ltd.; Victoria, Ltd.,
and Does 1 through 1000, inclusive, Defendants-Appellees.
Ann Marie STITT; Carol E. Williams; Jon A. Williams;
Gloria May Heckman; Mark A. Williams; Carol D.
Williams-Vyfvinkel; James R. Stitt,
Plaintiffs-Appellants,
and
Lewis & Company, Lawyers: L. Burke Lewis, Amy J. Cassedy,
and Arthur L. Martin, Claimant-Appellant,
v.
Dale A. WILLIAMS; Agean, Ltd., a California Limited
Partnership; Creekside, Ltd., a California Limited
Partnership; The 49-010-19, a California Limited
Partnership; Norwood, Ltd., also known as Southwind, a
California Limited Partnership and Does 1 through 300;
Leasco Investments, Inc.; Leasco Realty Company, Inc.; Bay
Blue Vistas, Ltd.; Delta Park, Ltd.; Delta, Ltd.; Gunnar
I, Ltd.; Sandalwood, Ltd.; Colony Cove IV, Ltd.; Colony
Cove V, Ltd.; Ontario Mobile, Ltd.; Ponderosa Pines, Ltd.;
Seton Mobile Home Park, Ltd.; Rory I, Ltd.; Ninth Street
Condominium, Ltd.; Villa Del Arroyo, Ltd.; Victoria, Ltd.,
and Does 1 through 1000, inclusive, Defendants-Appellees.
Ann Marie STITT; Carol E. Williams; Jon A. Williams;
Gloria May Heckman; Mark A. Williams; Carol D.
Williams; James R. Stitt, Plaintiffs-Appellees,
and
Lewis & Company, Lawyers: L. Burke Lewis, Amy J. Cassedy,
and Arthur L. Martin, Claimant-Appellant,
v.
Dale A. WILLIAMS; Agean, Ltd., a California Limited
Partnership; Creekside, Ltd., a California Limited
Partnership; The 49-010-19, a California Limited
Partnership (aka "Southwind"); Norwood, Ltd., a California
Limited Partnership and Does 1 through 300, inclusive;
Leasco Investments, Inc., Leasco Realty Company, Inc., Bay
Blue Vista, Ltd., Delta Park, Ltd., Delta, Ltd., Gunnar I,
Ltd., Sandalwood, Ltd., Colony Cove I, Ltd., Colony Cove V,
Ltd., Ontario Mobile Ltd., Ponderosa Pines, Ltd., Seton
Mobile Home Park, Ltd.; Rory I, Ltd., Ninth Street
Condominium, Ltd.; Villa Del Arroyo, Ltd., Victoria, Ltd.,
and Does 1 through 1000, inclusive, Defendants-Appellants.
Ninth Circuit.
Decided Nov. 15, 1990.
Page 519
L. Burke Lewis, Lewis and Co., Santa Monica, Cal., for plaintiffs-appellants-cross-appellees.
Thomas M. Mathiowetz and Steven B. Eggleston, Wohl & Eggleston, Sacramento, Cal., for defendants-appellees-cross-appellants.
Appeal from the United States District Court for the Northern District of California.
Before GOODWIN, Chief Judge, PREGERSON and REINHARDT, Circuit Judges.
PREGERSON, Circuit Judge:
Appellants brought this action seeking to recover damages allegedly incurred by reason of appellees' acts of securities fraud, racketeering, failure to comply with securities
Page 520
registration requirements, and breach of fiduciary duty. The district court granted summary judgment for appellees, holding that most of the federal claims were time-barred and that appellants had failed to offer any evidence of a scheme or artifice to defraud. 1 Several months later, the court imposed sanctions on appellants and their counsel in the amount of $41,378.39 for having violated Rule 11 in their filing of a brief in opposition to appellees' motion for summary judgment.Appellants appealed both the grant of summary judgment and the imposition of sanctions; appellees cross-appealed on the sanctions issue. The appeals were consolidated for consideration by this panel. For the reasons discussed below, we affirm the district court's order granting summary judgment, but we reverse the award of Rule 11 sanctions. Finally, we remand so that the district court may consider the amount of attorneys' fees appellants must pay to appellees pursuant to the terms of one of the limited partnership agreements.
Appellants' First Amended Complaint alleged that appellee Dale A. Williams ("Dale"), a land developer and syndicator, defrauded appellants 2 in the course of managing, as general partner, a number of limited partnerships of which appellants were limited partners. In particular, appellants alleged that Dale:
(1) misrepresented to appellants the nature of the partnerships agreements and the allocation of profits and other interests the agreements provided for;
(2) failed to provide appellants with the complete texts of the partnership agreements, registration materials, disclosure statements, or exemptions from registration requirements;
(3) presented to appellants for their signature, which he obtained, only the blank signature pages from the partnership agreements while representing to appellants that the agreements were fair, customary and consistent with prior representations and understandings;
(4) attached to the signed signature pages partnership agreements which contained unfair allocations of profits and other interests;
(5) failed to provide appellants with copies of the partnership agreements for a year and a half after appellants had signed them;
(6) made repeated promises and representations that the percentage interests of the partnerships would be changed to reflect a fair allocation of profits and other interests;
(7) commingled and overborrowed on appellants' partnership assets, and
(8) failed to account or make available to appellants the partnerships' books and records.
Appellants alleged that, in carrying out these actions, Dale violated the Securities Act of 1933, 15 U.S.C. Sec. 77a et seq., the Securities Exchange Act of 1934, 15 U.S.C. Sec. 78a et seq., rules and regulations promulgated under those statutes, the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. Sec. 1961 et seq., and state and federal "statutory and common law." Appellants sought damages, rescission of the limited partnerships' securities agreements, reformation of the securities agreements to conform to alleged prior oral agreements, dissolution of the partnerships, and an accounting.
This court reviews de novo a trial court's grant of summary judgment. Lojek v. Thomas, 716 F.2d 675, 677 (9th Cir.1983). Summary judgment is appropriate if, viewing the evidence in the light most favorable to the opposing party, there is no genuine issue of material fact and the substantive law was correctly applied. Roberts v. Continental Insurance Co., 770 F.2d 853, 855 (9th Cir.1985).
Page 521
We review for abuse of discretion a district court's denial of an application made pursuant to Fed.R.Civ.P. 56(f) to continue a ruling on a summary judgment motion to permit discovery. Volk v. D.A. Davidson & Co., 816 F.2d 1406, 1417 (9th Cir.1987).
Appellate review of orders imposing sanctions under Rule 11 of the Federal Rules of Civil Procedure may require a number of separate inquiries. Zaldivar v. City of Los Angeles, 780 F.2d 823, 828 (9th Cir.1986). If the facts relied upon by the district court to establish a violation of the Rule are disputed on appeal, we review the factual determinations of the district court under a clearly erroneous standard. Id. If the legal conclusion of the district court that the facts constitute a violation of the Rule is disputed, we review that legal conclusion de novo. Id. Finally, if the appropriateness of the sanctions imposed is challenged, we review the sanction under an abuse of discretion standard. Id.
I. The Summary Judgment Appeal
A. Federal Securities Registration Claims
The district court granted summary judgment for appellees on appellants' federal securities registration claims 3 because it found that the claims were barred by the statute of limitations. 4 According to the district court, securities registration claims must be brought within one year of discovery of the claims and, in any event, within three years of the offering. Finding that all offerings occurred before 1980, the court held that the registration claims stated in appellants' complaint, filed July 16, 1984, were barred by the statute of limitations.
We agree with the district court's reasoning. Dale's alleged failure to register the securities is not actionable because the securities were offered and purchased more than three years before appellants brought their lawsuit. 15 U.S.C. Sec. 77m. Appellants purchased their limited partnership interests between 1976 and 1979. 5 Because appellants did not file their complaint until 1984, their registration claims are barred by the statute of limitations. See Admiralty Fund v. Hugh Johnson & Co., 677 F.2d 1301, 1308 (9th Cir.1982); 15 U.S.C. Secs. 77m, 77l (1), 77e.
B. Securities Fraud Claims
The district court held that appellants' federal securities fraud claims were also barred by the statute of limitations. Applying California's three-year statute of limitations for fraud actions, the court determined that the statute began to run in 1979, when appellants received copies of the texts of the partnership agreements containing the allegedly unfair allocation of percentage interests. Because appellants did not bring their action until 1984, the
Page 522
court held, the statute of limitations barred their suit. The court rejected appellants' attempt to apply principles of tolling and equitable estoppel to escape the statute of...To continue reading
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