Weatherly v. Pershing, LLC
| Decision Date | 12 July 2018 |
| Docket Number | Civil Action No. 3:14-CV-0366-N |
| Citation | 322 F.Supp.3d 746 |
| Parties | Patsy WEATHERLY, et al., Plaintiffs, v. PERSHING, LLC, Defendant. |
| Court | U.S. District Court — Northern District of Texas |
Robert Cecil Gilbert, Kopelowitz Ostrow Ferguson Weiselberg Gilbert, Coral Gables, FL, Scott David Hirsch, Charles E. Scarlett, Scarlett & Hirsch PA, Boca Raton, FL, Jason G. Andrew, Lindsey C. Grossman, Michael E. Criden, Criden & Love PA, South Miami, FL, for Plaintiffs.
Kathy M. Klock, Jonathan Brennan Butler, Akerman LLP, West Palm Beach, FL, Thomas M. Farrell, McGuireWoods LLP, Houston, TX, Danielle M. Kudla, Jeffrey J. Chapman, McGuireWoods LLP, New York, NY, Michael F. Easley, Jr., McGuireWoods LLP, Raleigh, NC, Stanley A. Roberts, McGuireWoods LLP, Richmond, VA, Susan Groh, McGuireWoods, Chicago, IL, for Defendant.
This Memorandum Opinion and Order addresses Defendant Pershing, LLC's ("Pershing") motion for summary judgment [129]. Because Plaintiffs' claims are time-barred, the Court grants the motion.
This action arises out of the Ponzi scheme perpetrated by R. Allen Stanford, his associates, and various entities under his control for several years. The facts associated with Stanford's scheme are well established, see, e.g. , Janvey v. Democratic Senatorial Campaign Comm. , 712 F.3d 185, 188–89 (5th Cir. 2013), and are not recounted in great depth here. At root, the scheme was based on Stanford's sale of fraudulent certificates of deposit ("CDs") through an offshore bank located in Antigua, known as Stanford International Bank Limited. While Stanford represented to investors that the CD proceeds were invested only in low-risk, stable funds, in reality the proceeds were funneled into speculative real estate investments and used to support Stanford's lavish lifestyle. Stanford's scheme finally came to public light on February 17, 2009 when the Securities and Exchange Commission ("SEC") issued a report charging Stanford and his entities with fraud.
Plaintiffs here are former investors in Stanford's Ponzi scheme. They filed this suit against Pershing, a financial services firm that they allege served as clearing broker for Stanford Group Company, on November 20, 2013. The allegations in this suit are similar to those previously raised in the class action against Pershing titled Turk v. Pershing, LLC , No. 3:09-CV-2199-N, 2014 WL 12717194 (N.D. Tex. filed Nov. 18, 2009) (the "Turk Suit"). Initially filed in the Southern District of Florida, the instant case was subsequently transferred to this Court for pretrial proceedings as part of the Stanford multidistrict litigation. Plaintiffs assert two claims in this action: one for fraud and another for participation in a breach of a fiduciary duty. Because both claims are time-barred, the Court grants Pershing's motion for summary judgment.
Courts "shall grant summary judgment 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) ; Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In making this determination, courts must view all evidence and draw all reasonable inferences in the light most favorable to the party opposing the motion. United States v. Diebold, Inc. , 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962). The moving party bears the initial burden of informing the court of the basis for its belief that there is no genuine issue for trial. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
When a party bears the burden of proof on an issue, she "must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in [her] favor." Fontenot v. Upjohn Co. , 780 F.2d 1190, 1194 (5th Cir. 1986) (emphasis omitted). When the nonmovant bears the burden of proof, the movant may demonstrate entitlement to summary judgment by either (1) submitting evidence that negates the existence of an essential element of the nonmovant's claim or affirmative defense, or (2) arguing that there is no evidence to support an essential element of the nonmovant's claim or affirmative defense. Celotex , 477 U.S. at 322–25, 106 S.Ct. 2548.
Once the movant has made this showing, the burden shifts to the nonmovant to establish that there is a genuine issue of material fact such that a reasonable jury might return a verdict in its favor.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586–87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Moreover, "[c]onclusory allegations, speculation, and unsubstantiated assertions" will not suffice to satisfy the nonmovant's burden. Douglass v. United Servs. Auto. Ass'n , 79 F.3d 1415, 1429 (5th Cir. 1996) (en banc). Indeed, factual controversies are resolved in favor of the nonmoving party " ‘only when an actual controversy exists, that is, when both parties have submitted evidence of contradictory facts.’ " Olabisiomotosho v. City of Houston , 185 F.3d 521, 525 (5th Cir. 1999) (quoting McCallum Highlands, Ltd. v. Washington Capital Dus, Inc. , 66 F.3d 89, 92 (5th Cir. 1995) ).
Pershing moves for summary judgment on both of Plaintiffs' claims on the grounds that (1) both claims are time-barred, (2) Plaintiffs cannot establish any of the elements of their fraud claim, and (3) Plaintiffs' participation in a breach of a fiduciary duty claim fails on the merits. In holding that both claims are indeed time-barred, the Court need not—and thus does not—reach Pershing's alternative grounds for summary judgment.1
Under Florida law, fraud claims are subject to a four-year statute of limitations. See FLA. STAT. § 95.11(3)(j) (1991) ; see also Goodwin v. Sphatt , 114 So.3d 1092, 1094 (Fla. Dist. Ct. App. 2013). Although claims generally begin to accrue when the last element of the cause of action occurs, Florida applies the delayed discovery doctrine to fraud claims. Davis v. Monahan , 832 So.2d 708, 709 (Fla. 2002). Under this doctrine, a fraud claim does not accrue until the plaintiff discovers, or reasonably should have discovered with the exercise of due diligence, the facts giving rise to the claim. Hearndon v. Graham , 767 So.2d 1179, 1184 (Fla. 2000).
Plaintiffs filed the instant action on November 20, 2013. Thus, absent any tolling, this action is timely if, at the earliest, Plaintiffs first discovered, or reasonably should have discovered, the facts giving rise to their fraud claim on November 20, 2009. On one hand, Pershing argues that Plaintiffs' fraud claim began accruing on February 17, 2009 when the SEC first publicly reported Stanford's scheme. Plaintiffs, on the other hand, contend that they neither discovered nor reasonably should have discovered Pershing's role in the scheme until November 18, 2009 when the Turk Suit was filed. But, even assuming Plaintiffs' fraud claim did not begin accruing until November 18, 2009, their claim is still two days untimely.
As a result, Plaintiffs resort to tolling doctrines in an attempt to render their fraud claim timely. In particular, Plaintiffs offer three such doctrines: tolling under American Pipe & Construction Co. v. Utah , 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974) ; tolling while the Turk Suit was stayed pending an appeal; and equitable tolling due to fraudulent concealment. However, each of these tolling doctrines is unavailing.
1. American Pipe Tolling Is Inapplicable to Florida State Law Claims. — Under American Pipe , individual claims are tolled during the pendency of a class action suit until class certification is denied or the individual ceases to be a class member. See 414 U.S. at 554, 94 S.Ct. 756 ; see also Crown, Cork & Seal Co. v. Parker , 462 U.S. 345, 350, 103 S.Ct. 2392, 76 L.Ed.2d 628 (1983). Here, Plaintiffs invoke American Pipe tolling from November 18, 2009, the date the Turk Suit was filed before this Court, to June 25, 2010, the date the class definition in the Turk Suit was modified to exclude Plaintiffs. Allowing this approximately seven-month period of tolling would render Plaintiffs' fraud claim timely. But, unfortunately for Plaintiffs, American Pipe tolling is inapplicable to Florida state law claims.
Time limitations on legal actions in Florida are governed by the provisions of chapter 95 of the Florida Statutes. Major League Baseball v. Morsani , 790 So.2d 1071, 1075 (Fla. 2001). In particular, section 95.051 "delineates an exclusive list of conditions" that can toll the running of the statute of limitations. Id. (emphasis added). In relevant part, section 95.051 reads as follows:
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