Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

HARDY v. FIRST AMERICAN BANK

July 22, 1991

CHARLES HARDY, et al.
v.
FIRST AMERICAN BANK, N.A., et al.



The opinion of the court was delivered by: NIXON

 JOHN T. NIXON, CHIEF UNITED STATES DISTRICT JUDGE

 Several defendants' motions to dismiss the complaint under Fed.R.Civ.P. 12(b)(6) or alternatively for a more definite statement under Fed.R.Civ.P. 12(e) are before the Court.

 I. BACKGROUND

 The factual background of the case involves the sale to plaintiffs by defendants of limited partnership interests in a real estate venture involving a downtown Nashville, Tennessee property known as St. Cloud's Corner. Plaintiffs generally allege that defendants are liable for fraud and failure to register an offering under the federal securities laws and under state common law and statutes. Since this is a motion on the pleadings, only the factual allegations in the complaint are material. The relevant allegations to defendants motions follow.

 In their allegations relating to all counts, plaintiffs allege that defendants made misrepresentations during the offering and sale of the St. Cloud partnership units. The offering appears to have begun on April 30, 1987 when plaintiffs allege that the defendants began to pursue sales of the units to private investors. The sale appears to have occurred between August 17, 1987 and October 16, 1987 when plaintiffs allege that an initial closing and two subsequent closings of an escrow account at First American were executed and thereby effectuated their subscriptions to the units. Plaintiffs' complaint goes on to allege the nature and content of several of defendants' misrepresentations. Generally, however, no mention is made of the time or place of or participants in the specific misrepresentations. Plaintiffs also plead that discovery of defendants fraud was not made until just before the filing of this suit because defendants actively concealed the fraud, but do not state any specific circumstances of the discovery. In the individual counts of the complaint, plaintiffs incorporate by reference the alleged facts relevant to all counts, allege defendants' use of the mails and interstate commerce as a basis for jurisdiction where necessary for federal claims, and spell out the general elements that, if proved, would render defendants liable.

 In deciding a motion to dismiss under Fed.R.Civ.P. 12(b)(6), a court must assume all facts averred in the complaint as true, Miree v. DeKalb County, Georgia, 433 U.S. 25, 27 n. 2, 53 L. Ed. 2d 557, 97 S. Ct. 2490 (1977), and indulge all reasonable inferences in favor of the plaintiff. 5A Wright & Miller, Federal Practice and Procedure, § 1357 at 319 (2d ed. 1990). The Court cannot grant such a motion "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957).

 One defendant argues that plaintiffs have not pleaded federal subject matter jurisdiction properly and therefore the federal claims should be dismissed. Defendant argues that plaintiffs are required to plead that defendants perpetrated the fraud through particular use of the mails or other instrumentalities in interstate commerce (i.e. an interstate telephone call) to establish federal jurisdiction.

 Widely followed Sixth Circuit cases hold that as long as plaintiff alleges use of an instrument of interstate commerce (i.e. any telephone call whether inter- or intrastate), such allegation establishes federal subject matter jurisdiction. Aquionics Acceptance Corp. v. Kollar, 503 F.2d 1225, 1228 (6th Cir. 1974); Dupuy v. Dupuy, 511 F.2d 641, 643-44 (5th Cir. 1975); see also Heyman v. Heyman, 356 F. Supp. 958, 969 (S.D.N.Y. 1973). Plaintiff has pleaded such uses of instrumentalities of interstate commerce in each federal count of the complaint. Thus, the complaint withstands the argument for dismissal for lack of federal subject matter jurisdiction.

 III. CLAIMS UNDER SECTION 12(1) OF THE 1933 ACT

 In the complaint, Plaintiffs allege that defendants offered or sold them St. Cloud shares, while failing to register the limited partnership offering, thereby violating section 12(1) of the Securities Act of 1933 (1933 Act), and did not meet any of the registration exemptions. In their motion, Defendants counter that, regardless of the merits of this claim, the applicable statute of limitations under section 13 has run. Plaintiffs reply to defendants' limitation defense is that the limitation period has not run, or alternatively, that equitable tolling should apply to the statute of limitations because the case involved fraudulent concealment.

 Section 12(1) of the 1933 Act creates civil liability for any person who offers or sells securities without registering the offering under section 5 of the 1933 Act. 15 U.S.C. § 771(1). Section 13 of the 1933 act expressly defines the statute of limitations for actions under section 12(1).

 
No action shall be maintained to enforce any liability . . . created under section [12(1)], unless brought within one year after the violation upon which it is based. In no event shall any such action be brought to enforce a liability created under section [12(1)] more than ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.