National Credit Union Administration Board v. Bear, Stearns & Co., Inc. et al
Filing
69
MEMORANDUM AND ORDER - 19 Defendants' Motion to Dismiss as amended is granted in part and denied in part, and various claims are hereby dismissed as set forth in this order. Signed by District Judge John W. Lungstrum on 9/3/2013. (ses)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
NATIONAL CREDIT UNION
ADMINISTRATION BOARD,
)
)
)
Plaintiff,
)
)
v.
)
)
BEAR, STEARNS & CO.,INC.,
)
n/k/a J.P. MORGAN SECURITIES, LLC;
)
STRUCTURED ASSET MORTGAGE
)
INVESTMENTS II, INC.; and
)
BEAR STEARNS ASSET BACKED
)
SECURITIES I, LLC,
)
)
Defendants.
)
)
_______________________________________)
Case No. 12-2781-JWL
MEMORANDUM AND ORDER
This matter is presently before the Court on defendants’ motion to dismiss (Doc.
# 19).
The Court concludes that certain of plaintiff’s claims are time-barred.
Accordingly, the motion is granted in part and denied in part, as set forth more
specifically herein.
I.
Background
Plaintiff National Credit Union Administration Board brings this suit as
conservator and liquidating agent of the following four credit unions: U.S. Central
Federal Credit Union (“U.S. Central”), Western Corporate Federal Credit Union
(“WesCorp”), Members United Corporate Federal Credit Union (“Members United”),
and Southwest Corporate Federal Credit Union (“Southwest”). The suit relates to 83
different residential mortgage-backed securities (“RMBS” or “certificates”), each
purchased by one of the credit unions between October 2005 and June 2007. By the
present suit, filed on December 14, 2012, plaintiff brings claims under the federal
Securities Act of 1933 and under California, Kansas, Texas, and Illinois statutes, based
on alleged untrue statements or omissions of material facts relating to each RMBS.
Defendant Bear, Stearns & Co. was the underwriter or seller for the certificates, while
the other two defendants issued the certificates.1 Defendants have moved to dismiss all
claims.
Plaintiff has brought eight other similar suits, involving different certificates, in
this district, which cases have been re-assigned to the undersigned judge. In one of those
actions, Case No. 12-2648, by Memorandum and Order dated April 8, 2013, the Court
granted in part and denied in part the motion to dismiss filed by the Credit Suisse
defendants (“Credit Suisse”). See National Credit Union Admin. Bd. v. Credit Suisse
Sec. (USA) LLC, __ F. Supp. 2d __, 2013 WL 1411769 (D. Kan. Apr. 8, 2013) (“Credit
Suisse”). In that opinion, the Court held as follows: (1) Credit Suisse did not show that
the Court lacked venue over plaintiff’s claims asserted on behalf of credit unions
WesCorp and Southwest; (2) plaintiff’s claims were not untimely as a matter of law with
1
Another alleged issuer, IndyMac MBS, Inc., was originally named as a
defendant, but plaintiff has dismissed its claims against that entity.
2
respect to the applicable one- and two-year discovery limitations periods; (3) the socalled Extender Statute, 12 U.S.C. § 1787(b)(14), which provides the limitations period
for claims brought by plaintiff as conservator or liquidator, applies to federal and
statutory claims; (4) the Extender Statute displaces both limitations periods in the
otherwise-applicable federal (Section 13, 15 U.S.C. § 77m) and state statutes; (5)
plaintiff’s three-year limitations period under the Extender Statute was triggered by
plaintiff’s appointment as conservator for a credit union, not by its later appointment as
liquidator; (6) the Extender Statute’s three-year limitations period may not be extended
by a tolling agreement; (7) plaintiff’s assertion of American Pipe tolling with respect to
its federal claims based on some certificates did not fail as a matter of law at this stage;
and (8) plaintiff’s substantive allegations were sufficient to state plausible and
cognizable claims against Credit Suisse. In some of its rulings, the Court followed the
reasoning of Judge Rogers in ruling on a motion to dismiss in RBS, another of these nine
similar cases (before the case was reassigned). See id. (citing National Credit Union
Admin. Bd. v. RBS Sec., Inc., 900 F. Supp. 2d 1222 (D. Kan. 2012) (“RBS”)). Last week,
in an interlocutory appeal in RBS, the Tenth Circuit affirmed Judge Rogers with respect
to two of the issues listed above, holding that the Extender Statute does apply to federal
and statutory claims and does displace Section 13’s three-year limitations period. See
National Credit Union Admin. Bd. v. Nomura Home Equity Loan, Inc., __ F.3d __, 2013
WL 4516997 (10th Cir. Aug. 27, 2013).
After issuing its opinion in Credit Suisse, the Court invited the parties in seven
3
of the other similar cases (one case had not yet been filed) to submit briefs addressing
(a) the application of the Court’s rulings in Credit Suisse to the motions to dismiss filed
by the defendants in those cases and (b) the specific issue of the enforceability of
plaintiff’s tolling agreements.
II.
Analysis
A.
Initial Application of Credit Suisse
As an initial matter, the Court notes that defendants, in their supplemental briefing
in support of their motion to dismiss, have not renewed their arguments relating to the
sufficiency of plaintiff’s substantive allegations, the application of the discovery
limitations periods, the displacement of Section 13’s limitations periods by the Extender
Statute, and the application of the Extender Statute to statutory claims. Thus, defendants
have not distinguished the Court’s Credit Suisse rulings concerning those issues, and the
Court resolves the issues in plaintiff’s favor in this case as well, for the reasons stated
in Credit Suisse and as held by the Tenth Circuit in the appeal in RBS.
Nevertheless, defendants seek dismissal of some of plaintiff’s claims on behalf
of U.S. Central and WesCorp as time-barred pursuant to the three-year limitations period
imposed by the Extender Statute. Absent some form of tolling, plaintiff was required to
file those claims by March 20, 2012, three years after its appointment as conservator for
those credit unions. Plaintiff did not initiate this action, however, until December 14,
2012. Nor may plaintiff rely on the Extender Statute’s alternative reference to the
4
applicable state-law limitations periods, as this case was filed more than five years (the
applicable repose period for all four states) after the purchases of these certificates.
Plaintiff has asserted tolling pursuant to an agreement executed by the parties, but
the Court has, by an opinion issued in the Credit Suisse case on July 10, 2013, reaffirmed
its ruling that plaintiff may not rely on such an agreement to avoid application of the
Extender Statute’s limitations period, and that ruling will also be applied in the present
case. Thus, with respect to certificates for which plaintiff has not asserted some other
form of tolling, plaintiff’s federal and state claims on behalf of U.S. Central and
WesCorp would be time-barred and subject to dismissal. Based on plaintiff’s complaint
and the parties’ supplemental submissions, such claims include those based on the
following certificates:
Purchaser
Issuing Entity
CUSIP
U.S. Central
U.S. Central
U.S. Central
U.S. Central
U.S. Central
U.S. Central
U.S. Central
U.S. Central
U.S. Central
U.S. Central
U.S. Central
U.S. Central
U.S. Central
U.S. Central
U.S. Central
U.S. Central
U.S. Central
AHM 2007-2
AHM 2007-2
AHM 2007-2
BSABS 2006-HE4
BSABS 2006-HE4
BSABS 2007-SD3
BSSLT 2007-1
BSSLT 2007-1
BSSLT 2007-1
GMACM 2006-HE4
IMSA 2007-2
IMSA 2007-3
INDS 2006-3
INDS 2007-1
NAA 2007-1
NHELI 2007-1
SACO 2006-4
02660CAC4
02660CAD2
02660CAE0
07388AAB0
07388AAC8
07387LAA9
07401WAA7
07401WAP4
07401WBA6
38012UAC3
452570AD6
45257VAD8
43709RAA2
43708DAA4
65538NAE3
65537KAY6
785778RD5
5
WesCorp
WesCorp
WesCorp
WesCorp
WesCorp
WesCorp
WesCorp
WesCorp
WesCorp
WesCorp
WesCorp
WesCorp
WesCorp
WesCorp
WesCorp
WesCorp
WesCorp
WesCorp
WesCorp
WesCorp
AHMA 2007-3
BALTA 2006-2
BALTA 2006-2
BSMF 2007-AR4
BSMF 2007-AR5
BSMF 2007-AR5
BSMF 2007-AR5
BSMF 2007-AR5
IMSA 2006-4
IMSA 2006-4
IMSA 2006-5
IMSA 2007-1
IMSA 2007-2
LUM 2006-7
NHELI 2007-1
NHELI 2007-1
PCHLT 2005-4
PCHLT 2005-4
SAMI 2006-AR3
SAMI 2007-AR3
026935AD8
07386HF89
07386HF48
07401YAQ8
07400NAC4
07400NAE0
07400NAT7
07400NAU4
45257BAE0
45257BAA8
45257EAD6
452559AD9
452570AD6
55028BAB3
65537KAB6
65537KAC4
71085PDG5
71085PDH3
86360KAC2
86363NAZ2
Plaintiff has not disputed that, assuming the Court reaffirms and applies its prior rulings,
those claims would be subject to dismissal. Accordingly, defendants’ motion is granted
with respect to those claims based on the listed certificates, which claims are hereby
dismissed.
B.
Claims for Which American Pipe Tolling Has Been Asserted
Defendants also make several arguments for dismissal of claims on behalf of U.S.
Central and WesCorp for which plaintiff has asserted American Pipe tolling.
1.
PRE-2005 SHELF REGISTRATION STATEMENT
Defendants argue that plaintiff’s federal Section 11 claim based on one certificate
(BSMF 2006-AR1) was already stale in August 2008 when the class action on which
6
plaintiff relies for American Pipe tolling was initiated. Defendants assert, and plaintiff
does not dispute, that this particular offering was by a prospectus supplement pursuant
to a June 2003 shelf registration statement. Defendants note that that shelf registration
statement was filed before the December 2005 SEC rule change that provided that, for
purposes of Section 11 liability, a prospectus filing resets the effective date for the
registration statement. See 17 C.F.R. § 230.430B(f)(2) (“Rule 430B”). Defendants
argue that because this registration statement preceded the change, the three-year
limitations period under Section 13 for a Section 11 claim based on the prospectus
supplement began to run in June 2003, when the shelf registration statement was filed,
and thus expired in 2006, prior to any American Pipe tolling. See Maine State
Retirement Sys. v. Countrywide Fin. Corp., 722 F. Supp. 2d 1157, 1165 n.8 (C.D. Cal.
2010) (“For MBS Offerings pursuant to shelf registration statements filed before
December 1, 2005, the relevant “offering” date is the effective date of the registration
statement.”) (citing Finkel v. Stratton Corp., 962 F.2d 169, 173 (2d Cir. 1992)).
In response, plaintiff cites FHFA v. UBS Americas, Inc., 2012 WL 2400263
(S.D.N.Y. June 26, 2012). In FHFA, the court noted that Rule 430B clarified that an
issuer may satisfy its post-registration statement disclosure obligations not only by
means of a post-effective amendment, but also by prospectus supplement. See id. at *34. The court concluded that the new rule, by providing for a reset effective date for
prospectus supplements, sought to reconcile the Section 11 consequences of disclosure
by prospectus supplement with those of disclosure by post-effective amendment. See id.
7
at *4. The court further reasoned as follows:
Both parties question whether the Rule’s broadened interpretation
of what constitutes an initial bona fide offering [for purposes of Section
13’s limitations period as applied to a Section 11 claim] is applicable to
securities issued pursuant to registration statements that, like these, were
filed before December 1, 2005. Ultimately, it is not necessary to resolve
this issue. A filing that represents “a fundamental change in the
information set forth in the registration statement” has always been
deemed to restart the clock on Section 11 claims, 17 C.F.R. §
229.512(a)(1)(ii) [“Item 512”], and the fact that such a change may now
be made through a prospectus supplement as opposed to a posteffective
amendment does not alter that rule. The SEC release that accompanied
Rule 430B makes this clear, emphasizing that for non-issuers such as
“directors, signing officers, and experts,” the new Rule did not intend “the
filing of a form of prospectus . . . [to] result in a later Section 11 liability
date” than that which previously applied, while emphasizing that for such
parties, “the filing of a form of prospectus . . . reflecting fundamental
changes in the information in the registration statement” would continue
to trigger a new offering date. See SEC Rel. 33-8591, 2005 WL 1692642,
*86; accord In re Countrywide Fin. Corp. Sec. Litig., No. CV-07-052950MRP, 2009 WL 943271, at *6 (C.D. Cal. 2009) (noting that, under preRule 430B law, a new offering date was triggered by a filing that
represented a “fundamental change” in the registration statement).
See id. Thus, the court concluded that because the prospectus supplement in that case
represented a “fundamental change” in the registration statement information pursuant
to Item 512, the Section 11 limitations triggering date would be reset to the date of the
supplement, even though the shelf registration statement was filed before the new Rule
430B was promulgated in December 2005.
The Court is persuaded by the reasoning of the court in FHFA. Defendants
attempt to distinguish that case as one involving a post-effective amendment instead of
a prospectus supplement, which the FHFA court noted were distinct methods of
8
providing disclosures. In fact, however, the court in FHFA explicitly stated that the
defendants there had used prospectus supplements, perhaps in an effort to take advantage
of the new Rule 430B. See id. at *4. Moreover, the Maine State case on which
defendants rely did not address the potential applicability of Item 512’s “fundamental
change” provision, and that court cited only to a pre-2005 case involving a post-effective
amendment, see Finkel, 962 F.2d 169, which suggests that the Maine State court did not
distinguish between prospectus supplements and post-effective amendments—which
would make Item 512 applicable in either case.
In addition, as plaintiff notes, if Item 512’s “fundamental change” provision could
not apply to a prospectus supplement filed pursuant to a pre-2005 registration statement,
then a Section 11 claim based on misrepresentations in a supplement might become timebarred prior to the issuance of the supplement. Such an absurd result supports an
interpretation consistent with the SEC’s understanding and the FHFA court’s holding
that the trigger date for such a claim would be reset under Item 512 if the supplement
contained a fundamental change to the registration statement, even under pre-Rule 430B
law.
The parties in this case have not addressed whether the new Rule 430B (allowing
for a reset trigger date) could be applied retroactively to previously-filed registration
statements—the question the court declined to address in FHFA—nor have they
addressed whether Item 512’s “fundamental change” standard for a reset trigger date has
been met here. Accordingly, the Court cannot conclude at this time that this particular
9
Section 11 claim by plaintiff was necessarily time-barred prior to the start of the
American Pipe tolling asserted by plaintiff.
2.
APPLICATION TO THE EXTENDER STATUTE
Defendants argue that the Extender Statute’s limitations period should not be
subject to American Pipe tolling.2 Defendants have not cited any authority supporting
that position; instead, defendants seem to suggest that because the text of the Extender
Statute does not explicitly provide for American Pipe tolling, such tolling should suffer
the same fate as tolling by agreement, which the Court has held does not affect the
Extender Statute’s limitations periods. The Court rejects this argument. The Supreme
Court authority on which this Court relied for its prior ruling involved only tolling by
agreement. See Credit Suisse, 2013 WL 1411769, at *9 (citing Mid State Horticultural
Co. v. Pennsylvania R.R. Co., 320 U.S. 356 (1943)). Moreover, the Court relied on the
Extender Statute’s express provision that its limitations periods would apply
“[n]otwithstanding any provision of any contract,” see id. at *10—language that
implicates tolling by agreement but would not have any relevance to American Pipe
tolling. The fact that the Extender Statute does not explicitly address American Pipe
tolling just makes it like any other statute of limitations to which such tolling may apply.
The Court also disagrees with defendant’s position that the purpose of American
2
Plaintiff notes that defendants did not raise this issue in their initial briefing on
the motion to dismiss. Nevertheless, because both sides have now had an opportunity
to brief the issue, the Court will address it here.
10
Pipe tolling is not furthered in the case of this plaintiff’s actions on behalf of credit
unions under the Extender Statute. American Pipe tolling is intended to avoid the
unnecessary multiplicity of individual lawsuits, and the fact that plaintiff is a
governmental entity does not alter the fact that it otherwise would be forced to protect
by individual lawsuits its claims that may be included within class actions.
Finally, Tenth Circuit authority strongly indicates that American Pipe tolling may
apply in the context of the Extender Statute. In Joseph v. Wiles, 223 F.3d 1155 (10th
Cir. 2000), the Tenth Circuit concluded that American Pipe tolling does not compromise
the purposes of statutes of limitation and statutes of repose, and it held that Section 13’s
three-year period of repose is subject to American Pipe tolling. See id. at 1167-68. This
Court has previously ruled that the Extender Statute’s three-year limitations period acts
in a similar fashion to Section 13’s three-year repose period. Defendants attempt to
distinguish the Extender Statute from Section 13 by arguing that the latter is a statute of
general applicability; that distinction, however, even if accepted, does not provide a basis
for reading such a limitation into the Extender Statute. In the absence of authority
supporting defendants’ position, the Court sees no reason to distinguish Section 13 and
the Extender Statute for this purpose, and therefore Joseph dictates that plaintiff be
permitted to rely on American Pipe tolling (as otherwise appropriate) in satisfying the
Extender Statute’s three-year limitations period.
3.
STANDING
In Credit Suisse, the Court rejected the defendants’ arguments “that a party may
11
only take advantage of American Pipe tolling with respect to a claim based on a
particular certificate if a named plaintiff in the class action had standing to assert such
claim in that case,” and “that such a plaintiff would have standing only if it purchased
that certificate.” See Credit Suisse, 2013 WL 1411769, at *11. In following the majority
approach “under which the class action plaintiff’s standing is not necessarily required
for American Pipe tolling,” the Court noted that abuse by the use of placeholder class
action lawsuits could be avoided by a court’s disallowing tolling when “the
representative so clearly lacks standing that no reasonable class member would have
relied on the filing of the class action.” See id. (quoting Genesee County Employees’
Retirement Sys. v. Thornburg Mtge. Sec. Trust 2006-3, 825 F. Supp. 2d 1082, 1162
(D.N.M. 2011)).
Based on that possible exception noted by the Court in Credit Suisse, defendants
argue that American Pipe tolling should not be applied with respect to plaintiff’s claims
based on 20 particular certificates because in those corresponding class actions the
plaintiffs improperly alleged standing for those certificates based solely on a common
registration statement. Defendants note that courts have unanimously held that a
common registration statement does not provide standing with respect to a certificate not
purchased by a representative plaintiff.
The Court rejects this argument. In Credit Suisse, the Court noted that at least
one circuit court had held that a named class-action plaintiff need not have purchased the
particular certificate in order to have standing. See id. at *12 (citing NECA-IBEW Health
12
& Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145, 157-64 (2d Cir. 2012)). In
NECA-IBEW, the Second Circuit allowed for standing based on common originators.
See NECA-IBEW, 693 F.3d at 164. Plaintiff asserts that, for each certificate here, either
a named plaintiff in a class action purchased in the same offering or a named plaintiff
could assert standing based on originators common to the security actually purchased by
the named plaintiff. Thus, under NECA-IBEW and Credit Suisse, a plaintiff could
reasonably have relied on the filing of these class actions for purposes of American Pipe
tolling.
Defendants reply that the named plaintiffs in these class actions did not actually
rely on common originators for standing, but instead relied on a common registration
statement, which the courts agree cannot provide standing. Defendants have not
adequately explained, however, why that distinction is material here, as a plaintiff could
reasonably rely on any valid basis for standing that might ultimately prevail, whether or
not asserted in the class-action complaint. Standing can entail a difficult, fact-intensive
analysis, see Genesee County, 825 F. Supp. 2d at 1164, and the Court cannot say that a
plaintiff cannot have reasonably relied on the filing of these class actions to toll the
limitations period for its claims, particular in light of the fact that courts have permitted
standing based on common originators. Accordingly, the Court is not persuaded that
American Pipe tolling should not be permitted with respect to these certificates, and this
portion of defendants’ motion to dismiss is hereby denied.
4.
APPLICATION TO STATE CLAIMS
13
In their original brief in support of their motion to dismiss, defendants argued that
American Pipe tolling could not apply to plaintiff’s state-law claims. In its response,
plaintiff failed to address that argument and asserted only that some of its federal claims
were subject to American Pipe tolling. Plaintiff did argue for American Pipe tolling for
state-law claims in at least one related action, however (WaMu, Case No. 13-2012-JWL).
Subsequently, in its supplemental response, plaintiff asserted that such tolling should
apply as well to the state-law claims in this case.
Defendants argue that plaintiff should not be permitted to change its position in
this case in this manner. Regardless of whether plaintiff initially opposed this basis for
dismissal in this case, however, it did oppose this basis in another case, and the Court
must determine whether the asserted basis for dismissal is valid. Because the parties
have had the opportunity to brief this issue, the Court will address it.
This Court has previously held that, under Tenth Circuit law, “where state law
supplies the applicable statute of limitations, a court must look to the tolling law of that
particular state to determine whether to apply American Pipe tolling.” See In re
Urethane Antitrust Litig., 663 F. Supp. 2d 1067, 1080 (D. Kan. 2009) (citing State Farm
Mutual Auto. Ins. Co. v. Boellstorff, 540 F.2d 1223, 1230 n.11 (10th Cir. 2008)). In
Urethane, the Court then examined whether the particular state’s courts would apply
American Pipe tolling in a “cross-jurisdictional” context, in which the individual claim
was brought in state court following a class action filing in another court. See id. In that
case, the Court declined to import this tolling doctrine into two states’ limitations law
14
where it had not been previously recognized by courts in those states. See id. at 1081-83.
In this case, plaintiff has asserted claims under California, Kansas, Texas, and
Illinois statutes.
Defendants argue that none of those states has adopted cross-
jurisdictional tolling, and that plaintiff’s claims under the law of those states therefore
are not subject to American Pipe tolling.
Plaintiff does not dispute that neither California nor Illinois has adopted crossjurisdictional tolling. See Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1025 (9th
Cir. 2008) (noting that the California Supreme Court has not adopted cross-jurisdictional
tolling); Portwood v. Ford Motor Co., 701 N.E.2d 1102, 1103-05 (Ill. 1998) (refusing
to adopt cross-jurisdictional tolling). Accordingly, this Court will apply those states’
limitations laws without application of American Pipe tolling.
Plaintiff argues that Texas has adopted such tolling. Plaintiff relies on Grant v.
Austin Bridge Construction Co., 725 S.W.2d 366 (Tex. Ct. App. 1987), in which the
Texas Court of Appeals applied American Pipe-style tolling in the context of a previous
class action in Texas state court. See id. at 370. At least two federal district courts in
Texas then relied on Grant to allow tolling based on previously-filed federal class
actions. See Prieto v. John Hancock Mut. Life Ins. Co., 132 F. Supp. 2d 506, 518 (N.D.
Tex. 2001); In re Norplant Contraceptive Prods. Litig., 173 F.R.D. 185, 189 (E.D. Tex.
1997). In Bell v. Showa Denko K.K., 899 S.W.2d 749 (Tex. Ct. App. 1995), however,
a panel of the Texas Court of Appeals distinguished Grant in refusing to allow American
Pipe tolling based on a federal class action. See id. at 757-58. Finally, in Newby v.
15
Enron Corp., 542 F.3d 463 (5th Cir. 2008), the Fifth Circuit, after reviewing this caselaw
from Texas, concluded that Texas courts would not likely extend American Pipe tolling
to cases involving previous federal class actions.
Plaintiff argues that this Court should follow Prieto and Norplant and conclude
that Texas courts would allow cross-jurisdictional tolling. The persuasive value of those
cases is diminished, however, by the subsequent holding by the Fifth Circuit, those
courts’ superior court. Regardless of what Texas state courts may conclude in the future,
to this point they have not expressly adopted cross-jurisdictional tolling. In the absence
of such adoption, this Court will not import American Pipe tolling into that state’s
limitations law.
Finally, with respect to its Kansas claims, plaintiff relies on the Kansas Supreme
Court’s decision in Seaboard Corp. v. Marsh Inc., 295 Kan. 384 (2012). Seaboard
involved application of Kansas’s savings statute, K.S.A. 60-518, which allows a plaintiff
to commence a new action within six months after the failure of a timely action
otherwise than upon the merits. See id. The Kansas Supreme Court had previously held
that the savings statute applied to a previously-filed class action in which the subsequent
individual plaintiff was a putative class member. See id. at 395-98 (citing Waltrip v.
Sidwell Corp., 234 Kan. 1059, 1060-65 (1984)). In Seaboard, the court held that the
savings statute and Waltrip were not limited to situations involving an initial class action
filed in Kansas state court. See id. at 406.
Defendants note that the Seaboard court stressed that it had not adopted American
16
Pipe tolling, but instead acted only under the savings statute. See id. at 405. The Court
agrees that, in light of this pronouncement in Seaboard, American Pipe tolling should
not be applied as a part of Kansas limitations law. In citing Seaboard, however, plaintiff
states that the Kansas savings statute could be applied to its Kansas claims. In reply,
defendants have not addressed this issue of the application of the savings statute to
plaintiff’s Kansas claims.3
The Court need not address this issue at this time, however, because it concludes
that none of the state-law claims are ripe for dismissal on this basis at this time. As
noted above, defendants rely on this Court’s statement in Urethane that “where state law
supplies the applicable statute of limitations, a court must look to the tolling law of that
particular state to determine whether to apply American Pipe tolling.” See Urethane,
663 F. Supp. 2d at 1080. Defendants have apparently overlooked, however, that in the
case of the Extender Statute’s three-year period, federal law, and not state law, has
supplied the applicable statute of limitations. Thus, American Pipe tolling, a doctrine
of federal law, would apply to toll the Extender Statute’s three-year limitations period
after plaintiff became conservator for the credit unions. Defendants’ argument for
dismissal of the state-law claims on behalf of U.S. Central and WesCorp appears to be
3
In Seaboard, the court also held that the savings statute could apply even where
the claims in the two suits were not identical, as long as the claims were substantially
similar, based on the same conduct or transaction, and the defendant had received
adequate notice of the claim in the first action. See Seaboard, 295 Kan. at 418-20. Thus,
the fact that no Kansas state-law claims were asserted in the previous class actions on
which plaintiff relies would not necessarily preclude application of the savings statute.
17
based solely on expiration of the Extender Statute’s three-year period; thus, application
of American Pipe tolling to the state-law claims would not be precluded.4
Defendants also argue that, even if American Pipe tolling could apply to some
state-law claims, it would not apply here because the particular state-law claims asserted
in this case were not asserted in the prior class actions. Defendants have not cited any
authority in support of that argument, however. In fact, neither side has addressed
whether the Tenth Circuit requires an identity of claims for application of American Pipe
tolling, or whether claims based on the same facts may suffice. In the absence of
argument from the parties, the Court will not address that issue at this time.
Accordingly, the Court denies defendants’ motion for dismissal of certain state-law
claims on this basis.
5.
FAILURE TO PLEAD TOLLING
Finally, defendants seek the dismissal of plaintiff’s state-law claim based on
certificate CWALT 2006-OA16, brought on behalf of WesCorp, as time-barred. Perhaps
because it did not assert a federal claim based on that certificate, plaintiff failed to
include this certificate in the table in its complaint in which it listed the certificates for
which American Pipe tolling would apply. In the absence of such an assertion of tolling,
4
Although it is difficult to imagine how the Kansas savings statute could apply
prior to plaintiff’s conservatorships, plaintiff would not be precluded from asserting that
statute in opposition to an argument that a Kansas claim became time-barred under
Kansas limitations law prior to the application of the Extender Statute. Defendants have
not made that specific argument with respect to any particular certificate in this case.
18
defendants argue that the claim based on this certificate is time-barred.
Plaintiff does not dispute that this claim would be barred in the absence of
American Pipe tolling; plaintiff now asserts, however, that such tolling does apply in the
case of that certificate (by virtue of the Maine State class action). Defendants argue that
plaintiff was required to allege such tolling in the complaint. This Court previously held
in Credit Suisse, however, that a plaintiff is not necessarily required to plead such facts
in anticipation of a limitations defense, see Credit Suisse, 2013 WL 1411769, at *4-5,
and the Court applies that same ruling here. Thus, plaintiff may assert American Pipe
tolling with respect to a certificate for the first time at this stage, and defendants’ motion
to dismiss this claim as time-barred is denied.
IT IS THEREFORE ORDERED BY THE COURT THAT defendants’ motion
to dismiss (Doc. # 19) as amended is granted in part and denied in part, and various
claims are hereby dismissed as set forth herein.
IT IS SO ORDERED.
Dated this 3rd day of September, 2013, in Kansas City, Kansas.
s/ John W. Lungstrum
John W. Lungstrum
United States District Judge
19
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?